For three trading sessions in a row, the EUR/USD gains stop around the 1.1280 resistance level awaiting stronger catalysts to continue the bullish correction tone in order to breakout the bearish channel which still strongly stands. The positive inflation numbers from the U.S –CPI &PPI- stopped the USD losses, which suffered a lot against other majors due to confirmation from the Fed Reserve on the near interest rate cuts. The ECB also wasn’t far from this direction, as the Eurozone economy is suffering greatly, which will support a dovish policy stand by the ECB, which could eventually lead to dropping the interest rates to the negative area, as the continuation of the global trade wars negatively and strongly affect the Eurozone economy more than the economy of the US, who is a major part in these wars.
The Euro initially pulled back during the trading session on Friday but found enough buyers underneath the turn things around. This shows signs of strength, however there are a ton of resistance areas above. Ultimately this is a market that is going to continue to be choppy and difficult, so I think that there will continue to be reasons to go in both directions. Remember, both of the central banks are looking to cut interest rates so that of course is throwing more confusion into this currency pair.
The Euro tried to rally during the trading session on Thursday but found enough resistance above the turn things around and form a massive shooting star. This of course is a very negative look, and the question now is whether or not the Euro can hold any gains? The 50 day EMA is slicing right through the shooting star, so suddenly one has to wonder whether or not we are going to be able to hang on to any gains.
Global developments, which were a product of the global trade war, have raised doubts about the economic outlook and have strongly contributed to the adjustment of US Federal Reserve monetary policy makers to their view of the US economy and to try to intervene and do the necessary to maintain economic growth. The testimony of Federal Reserve Chair Powell in front the US Congress, and the latest minutes of the bank's meeting, underscores the near-chance of a reduction in US interest rates. Expectations have reached 100% that the bank will do so when it meets later this month. The adjustment contributed to stronger gains for the EUR / USD pair for a second consecutive day, reaching 1.1280 at the time of writing, rebounding from a two-week low when it tested support at 1.1193. Despite the recent rebound, the pair is still moving within its bearish channel.
The Euro rallied quite stringently during the trading session on Wednesday, reaching much higher after the opening statement by Jerome Powell at the Humphrey Hawkins testimony in front of the United States Congress. It seems to reiterate the idea that the Federal Reserve is getting ready to cut interest rates, which of course works against the value of the US dollar in general.
The FX market will watch today, and cautiously, any new signals from the US Federal Reserve about the future of its monetary policy. US job numbers for June have led markets to rule out that the bank will cut the US interest rates at its meeting this month. There will be testimony from Federal Reserve Chair Jerome Powell in front of the US Congress to clarify the state of the economy and the bank's plans to maintain its growth. After that, we will have an appointment with the announcement of the minutes of the last meeting of the bank. Prior to that, the EUR/USD pair is moving around the 1.1200 psychological support. The general trend of the pair is still bearish and although technical indicators reaching oversold levels, weakness in the EUR will continue to move within its bearish channel.
The EUR/USD pair initially felt towards the 61.8% Fibonacci retracement level during the day on Tuesday but then turned around to show signs of life again as the 1.12 level has shown itself to be supportive. However, we failed on the rally during the Monday session as well, so at this point the market looks very confused. That’s the natural state of this pair, so it should not be a huge surprise anybody who’s traded it for more than about 10 minutes.