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EUR/USD Upward Channel Underpins Buying Trend - Trade Idea! 


The EUR/USD currency pair prints 5-consecutive day winning streak and hit the 1.1627, highest level since September 2018 while represented 0.20% gains on the day. However, the pair's bullish bias could be associated with the fresh optimism about agreeability over E.U. Recovery Fund, which initially underpinned the shared currency and contributed to the currency pair gains.

At this particular time, the EUR/USD currency pair is currently trading at 1.1606 and consolidates in the range between the 1.1590 - 1.1621. However, the currency pair traders seemed cautious to place any strong position ahead of German preliminary PMIs.

The European Union (E.U.) Economic Commissioner Paolo Gentiloni said the recovery fund payments would begin in H2 2021, but 10% will be anticipated with plan approval. As per the additional comments, the "E.U. will have to approve new union resources, such as digital tax and co2 tax, to repay common debt between 2026 and 2056." further added, "Individual countries will have to repay the money if Europe is unable to agree with new resources to repay common debt.". However, the latest optimism about agreeability over E.U. Recovery Fund underpinned the shared currency and pushed the currency pair multi-year high above 1.16 marks.

U.S. President Donald Trump stated that China trade deal "means less to me now than it did" during his daily press briefing at the US-China front. This came after China's latest warnings to oust U.S. diplomats after the Trump administrations to leave the Chinese Consulate office in Houston. Additionally, the fears of a full-fledged tussle between the world's top two economies picked up further pace after U.S. Secretary of State Mike Pompeo hit China while justifying the U.S. decision to close China's consulate office in Houston. As per the keywords, "China walked away on their promises on Hong Kong." He also said, "Chinese consulate in Houston was a hub of spying and I.P. theft."

Apart from this, the United States crossed 4 million officially recorded Covid-19 cases, and a significant part of that recorded in just the last 15 days. As per the Johns Hopkins University's latest report, the U.S. has officially recorded 4,005,414 cases. While at least 143,820 people have died so far, and the report suggests that the cases are picking a further pace.

Florida has hit with 173 coronavirus deaths, a new record, and case totals run past 389,800. Apart from the US, Victoria, and Tokyo also reporting cases. While India and Brazil keep facing a faster rate of virus spread with fewer resources. However, the gloomy reports related-virus also continues to weigh on the risk sentiment.

On the other hand, the coronavirus-aid package's uncertainty was still on the table amid expectations that the much-awaited U.S. phase 4 fiscal package will be delayed, which also favored the risk-off market.

At the USD front, the broad-based U.S. dollar remained well bid on the day as investors turning to the safe-haven after the U.S. saw a record number of daily COVID-19 cases and downbeat U.S. data. However, the gains in the U.S. dollar kept the currency pair gains limited. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies recovered to 94.605.

Moving on, the currency pair traders seemed cautious to place any further bids as they all keep their eyes on the German/ Eurozone flash PMIs. However, the flash manufacturing PMI for Germany is scheduled to release at 0730 GMT and is seen improving further to 48.0 in July from June's 45.2 final print while the index for the services sector is seen expanding to 50.5 this month vs. 47.2 last.

On the flip side, the Eurozone flash manufacturing PMI (due at 0800 GMT) shows 50.0 for July against 47.4 seen in the previous month. The Eurozone services sector PMI is seen bouncing to 51.0 in the reported month vs. 48.3 previously. After releasing the data, the big beat on expectations will likely draw more substantial buying pressure for the shared currency.

The market players will keep their eyes on the preliminary readings of July month activity data from Australia, Europe, the U.K., and the U.S. for fresh impulse. Also, keep their eyes on the USD price dynamics and coronavirus headlines, which could play a key role in influencing the intraday momentum.

Daily Support and Resistance

S1 1.1371

S2 1.1466

S3 1.1519

Pivot Point 1.156

R1 1.1614

R2 1.1655

R3 1.175

EUR/USD– Trading Tip

The EUR/USD has traded in an upward channel, which is rendering resistance at 1.1629 level. Currently, the EUR/USD consolidating around 1.1609 mark and continuing a bullish bias can lead to its prices towards 1.1625 mark. An additional extension in the buying trend can point to the EUR/USD prices further higher until the 1.1690 level, but only if the pair manages to break out above the 1.1625 resistance mark. The EUR/USD pair is staying over 50 EMA that is currently supporting the bullish sentiment for the pair. Let's keep an eye on 1.1622 level to stay bullish above this level. Good luck!

EagleFX Review

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