The EUR/USD is currently flat.
Technical Analysis
On the EUR/USD hourly chart, we can see a previous bullish run which has since retreated to the current level.
If the bearish pressure overwhelms the current support, we may see the lower bollinger band function as the next immediate support. The bearish momentum will then likely find support at 1.13.
A return of bullish price action will probably see resistance at the middle and upper bollinger bands. Beyond these, the strong sentiment and technical region of 1.14 is likely to be a resistance.
Looking at the EUR/USD daily chart, we can see that the currency pair is now capped by the upper bollinger band. Needless to say, we need a clear breach of this level before focusing on 1.14.
If the bullish momentum crumbles, a return of bearish pressure may see an attempt to test the middle bollinger band around 1.126.
In forex trading, it is important that we observe all time frames to get the pulse of the current situation. Shorter time frames help to ascertain the current price action and sentiments. Longer time frames allow us to understand the momentum of the current price action and sentiments, whether if it is a sustained drive or a knee jerk reaction.
Fundamental and Sentimental Considerations
We mention often that to be successful in forex trading, it is important to consider the factors on a market level basis. There are many sentiment themes and assets correlation that may provide valuable insights.
At the beginning of the week, we released our latest Major Currency Pairs, US Dollar Index, Oil and Gold Analysis for our premium members. We commented that the current market movements of these assets suggested the presence of risk appetite. This appears to be correct as we can see the EUR/USD and S&P 500 are mostly green for the week. Congratulations to our members who have factored this consideration to their forex trading plans!
A significant contributing factor for the risk appetite is the rally of Chinese equities. This has led to other Asian equities rallying and by extension, Europe and the US. Having said so, there are signs of potholes emerging. The threat of a second wave of COVID-19 among countries that had seen the worst is creating apprehension. Melbourne, Australia is now under lock down and the cases in the US continue to climb. It is crucial to monitor developments as adverse situations may trigger increased risk aversion.
The USA Unemployment Claims is due soon and we need to pay attention to the data. Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy. If the release is better than expected, we may see increased risk appetite while a worse than expected release may trigger risk aversion.
The Bottom Line
It is important to follow an economic calendar as your forex trading plans may be impacted due to shifting sentiments. Members do log in to your dashboards for the economic calendar. You should also review the latest Major Currency Pairs, USD Index, Gold, Brent Oil analysis to complement your forex trading plan.
Traders should always practice proper money management and seek to understand the underlying tones for the market. May the pips be with you!
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EUR/USD Forecast Update 9 Jul 20
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