- EUR/USD reversal from 1.1238 extends to session lows below 1.1200.
- The euro remains vulnerable amid investors’ concerns about a second coronavirus wave.
- EUR/USD: Potential bull flag above 1.1232 – Credit Suisse.
The euro upside attempt witnessed on Friday’s European session has been short-lived. The pair was capped at 1.1238 before resuming the downside, extending to session lows sub 1.1200 on a risk-off session, with the major US indexes deep into negative territory.
US dollar rallies on risk aversion
Investor’s concerns about the coronavirus pandemic have crushed appetite for risk and are boosting the US dollar across the board. The worldwide increase in infections and the reports about Texas Governor, Greg Abbott, rolling back reopening plans amid a recent surge in COVID-19 cases are boosting fears about a second wave of restrictions and its negative impact on the economic recovery.
Before that, the common currency enjoyed a moderate impulse following the comments of ECB president Christine Lagarde. Lagarde affirmed that the world may have already passed the worst of the coronavirus crisis and that central banks have responded massively to the challenge.
On the macroeconomic front, US personal spending increased 8.2% in May, below market expectations of a 9% increment, while the personal income dropped 4.2%, in this case beating market expectations of a 6% decline.
EUR/USD: Potential bull flag above 1.1232 – Credit Suisse
Despite the current near-term downtrend, the FX analysis team at Credit Suisse contemplates the possibility of a bull “flag” pattern above 1.1232, “We believe the market may be trading in a potential bullish ‘flag’ pattern, which are short sharp countermoves which clear out prior positioning, eventually allowing the uptrend to reassert itself. Our core bias therefore stays higher, with short-term resistance first seen at 1.1232, above which would turn the short term risks back higher. Thereafter, an eventual move above 1.1339/69 would trigger the pattern, with next resistances at 1.1423, before the important 1.1495 high.”
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