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EUR/USD Set to Violate Upward Channel - What's Next? 


The EUR/USD currency pair erased some of its previous day gains but still traded above the one-month high of 1.1400 and extended its previous 4-day winning streak while represented 0.16% gains on the day. Let me remind you; the pair hit a high of 1.1423 early Tuesday. That level was last seen on June 10. However, the gains in currency pair could be attributed to the upbeat trading sentiment, which undermined the broad-based U.S. dollar and contributed to the currency pair gains.

The upbeat remarks of German Chancellor Angela Merkel about budget and recovery funds helped currency pair to hit the one-month high. At the moment, the EUR/USD currency pair is currently trading at 1.1402 and consolidating in the range between 1.1391 - 1.1423. However, the traders seemed cautious to place any strong position ahead of European Central Bank's (ECB) rate decision scheduled to happen on Thursday.

However, the currency pair's bullish bias seemed rather unaffected by weaker-than-expected German/Eurozone ZEW economic survey and weaker Industrial Production. At the data front, the German ZEW Economic Sentiment came in as 59.3 for the current month, a bit below consensus estimates pointing to a reading of 60. Meanwhile, the Current Situation Index also fell short of market expectations and edged higher to -80.9 from -83.1 recorded in May.

On the other hand, the data reported by Eurostat, which showed that Industrial Production in the Eurozone expanded by 12.4% in May following April's contraction of 18.2%. However, these figures arrived worse than the market expectation of 15%. These data failed to have a significant impact on the shared currency.

Apart from this, the upbeat market sentiment was supported by the hopes about the coronavirus vaccine, which overshadowed the fears of the ever-increasing numbers of the virus during the late last week. Moreover, the risk-on market sentiment was further bolstered after releasing the latest U.S. consumer inflation numbers, which exhibits that the headline CPI soared by 0.6% in June compared to 0.5% expected and -0.1% previous. The yearly rate matched expectations and came in at 0.6%.

The market traders cheered the optimism concerning the COVID-19 vaccine, which was triggered after the upbeat signals form Moderna and U.S. President Donald Trump's comments concerning the COVID-19 vaccine. The much-anticipated coronavirus vaccine created by Moderna triggered an immune response just like scientists assumed. In response, President Donald Trump said that the vaccine would be delivered in "record-breaking time." However, virus vaccine news eventually restricted safe-haven demand.

Daily Support and Resistance

S1 1.1153

S2 1.1223

S3 1.1261

Pivot Point 1.1293

R1 1.1331

R2 1.1363

R3 1.1433

On the technical side, the EUR/USD has violated the upward channel at 1.1430 level and above this, the next resistance is likely to be found around 1.1477 level. For now, the EUR/USD pair is expected to find immediate support at 1.1370 level. In case the EUR/USD manages to break above 1.1477 level, we may see EUR/USD prices heading towards the next resistance area of 1.1566 level. Consider the bullish bias extended by the RSI and 50 EMA; we should look for bullish trades above today's 1.1395 level. Good luck!

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