Last week, our technical indicators suggested going Long at or below 1.07675 setting a Stop Loss at 1.06, and going Short at or above 1.0771, setting a Stop Loss at 1.09768.
This week, the EURUSD price range was 1.0818 high, set yesterday, Wednesday, and 1.0709 low, set this past Tuesday. So, on Monday, we could have bought the currency pair at 1.0720, selling it on an intraday trading at 1.0776, for 0.52% profit. Also on Monday, we could have short it at 1.0776, covering it on an intraday trading at 1.0720, for 0.52% profit. Tuesday, we could have bought it at 1.0710, covering it on an intraday trading at 1.0747, for 0.35% profit. Also on Tuesday, we could have short it at 1.0747, covering it on an intraday trading at 1.0710, for 0.35% profit. Wednesday, we could have short it at 1.0817, covering it on an intraday trading at 1.0736, for 0.75% profit. Thursday, we could have short it at 1.0813, covering it on an intraday trading at 1.0784, for an extra 0.27% ROI.
Fundamental Overview
EURUSD gathered bullish momentum and climbed above 1.0810 to touch its highest level since June 12 on Wednesday. The pair stays in a consolidation phase near 1.0800 early Thursday.
Disappointing macroeconomic data releases from the US triggered a US Dollar (USD) selloff during the American trading hours on Wednesday and helped EURUSD turn north.
The ADP reported that private sector payrolls rose 150,000 in June, falling short of analysts’ estimate of 160,000, and the weekly data published by the Department of Labor showed that there were 238,000 first-time applications for unemployment benefits, up from 233,000 in the previous week.
Finally, the ISM Services PMI dropped to 48.8 in June from 53.8 in May, pointing to a contraction in the service sector’s business activity. Additionally, the Employment Index and the Prices Paid Index of the PMI survey dropped to 46.1 and 56.3, respectively.
According to the CME FedWatch Tool, the probability of a Federal Reserve rate cut declined to 27% from 32% before Wednesday’s data releases.
Financial markets in the US will remain closed in observance of the Independence Day holiday on Thursday. Hence, EUR/USD’s action could remain subdued. On Friday, the Bureau of Labor Statistics will release June jobs report, which will include Nonfarm Payrolls, Unemployment Rate and wage inflation figures.
Technical Analysis
The EURUSD is battling 1.0800, regaining upside momentum in the European session on Thursday. The pair’s renewed uptick is attributed to fresh US Dollar selling on escalated speculations of a September Fed rate cut. ECB Accounts is next in focus.
The currency pair climbed above 1.0800 on Wednesday, where the 100-day and the 50-day Simple Moving Averages (SMA) converge, but failed to make a daily close this level. Once 1.0800 is confirmed as support, technical buyers could remain interested. In this scenario, 1.0840 (Fibonacci 23.6% retracement of the latest uptrend) could be seen as interim resistance before 1.0900 (psychological level, static level).
In case 1.0800 stays intact as resistance, 1.0760 (Fibonacci 50% retracement) and 1.0730-1.0740 (Fibonacci 61.8% retracement, 20-day SMA) could be seen as support levels.
For next week, taking a look at the following 2023/2024 price action, we have a secret head and shoulders pattern, that no one knows about. In general, the head and shoulders pattern is a reversal pattern and usually occurs at the top of the trend.
These patterns are rarely perfect, so it’s not always easy to spot them. This one is really hard to see, but we made it easy for you. We have 2 shoulders, and each shoulder is composed of a parallel channel. Neckline / HEAD is in the middle. This is of course an important level and strong support/resistance.
Right now, the currency pair is at the support price level, but once we break it, it turns into a resistance. Of course, we expect a breakdown on this bearish pattern, so make sure to be prepared for what is coming!
Where to take profit? It depends on how long you want to wait.
We have market 3 strong levels on the way down.
The first is the neckline of the HaS pattern.
The second is the POC (Point of Control) of the previous market structure.
The third is the previous major swing low.
From the Elliott Wave perspective, we see a bearish Elliott Nest, that is composed of waves (1-2-1-2). This is an extremely strong fractal because once wave 3 starts, a steep downtrend begins. Usually, wave 3 is the strongest of all waves.
Hence our technical analysis is suggesting going Long at or below 1.07817 setting a Stop Loss at 1.06, and going Short at or above 1.08, setting a Stop Loss at 1.09.
As of 10:42 AM (GMT+1), the EURUSD was trading at 1.07953.
EUR to USD forecast for tomorrow Euro to US Dollar forecast on Friday, July, 5: exchange rate 1.083 US Dollars, maximum 1.099, minimum 1.067. EUR to USD forecast on Monday, July, 8: exchange rate 1.084 US Dollars, maximum 1.100, minimum 1.068. Euro to US Dollar forecast on Tuesday, July, 9: exchange rate 1.087 US Dollars, maximum 1.103, minimum 1.071. EUR to USD forecast on Wednesday, July, 10: exchange rate 1.088 US Dollars, maximum 1.104, minimum 1.072.
In 1 week, Euro to US Dollar forecast on Thursday, July, 11: exchange rate 1.090 US Dollars, maximum 1.106, minimum 1.074. EUR to USD forecast on Friday, July, 12: exchange rate 1.087 US Dollars, maximum 1.103, minimum 1.071. Euro to US Dollar forecast on Monday, July, 15: exchange rate 1.085 US Dollars, maximum 1.101, minimum 1.069. EUR to USD forecast on Tuesday, July, 16: exchange rate 1.089 US Dollars, maximum 1.105, minimum 1.073. Euro to US Dollar forecast on Wednesday, July, 17: exchange rate 1.088 US Dollars, maximum 1.104, minimum 1.072.
Until next article, wishing all of you wealthy trading!
Disclosures: The material provided herein is for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any interests in the EUR/USD or any other securities. This overview may include or be based in part on projections, valuations, estimates and other financial data supplied by third parties, which has not been verified by Pedro Ferreira. Any information regarding projected or estimated investment returns are estimates only and should not be considered indicative of the actual results that may be realized or predictive of the performance of the EUR/USD or any underlying security. Further, Pedro Ferreira is not long or short in the currency pair. Past investment results of any underlying managers should not be viewed as indicative of future performance of the EUR/USD.
