- EUR/USD is trading between 1.1730 and 1.1793, piercing the July highs of 1.1790 and up modestly from yesterday’s daily close of 1.1752 where the September high was made at 1.1815.
- EUR/USD bulls face risk of setbacks below the daily doji following the prior day’s spinning top closing candle.
Momentum is wearing thin although the greenback remains heavy below the trendline resistance, holding onto the 94 handle by the skin of its teeth as the euro continues to pressure the channel’s resistance and basing on the July peaks.
Analysts at Scotiabank noted that the comments from ECB Chief Economist Praet delivered modest, short-lived weakness in the EUR as they pushed back on the market’s hawkish interpretation of Draghi’s comments from Monday. “Record bearish yield spreads remain a significant headwind for EUR however risk reversals are showing a considerable moderation in the premium for protection against EUR weakness vs. the USD,” the analysts added.
FOMC is next key risk
Fed Preview: Near-Term Path Set in Stone, All Eyes on 2019 and Beyond
We are now entering the period before the FOMC showdown and profit taking should keep a lid on the pair following yesterday’s rally onto the 1.18 handle and the strong wage and jobs numbers from the Philly Fed non-manufacturing index (albeit low 37.4 vs 41.7 prior) should underpin the greenback in tot he Fed. Looking over to the yen and sterling flows, EUR/JPY is enabling support while Wall Street performs marginally better, (all benchmarks in the green, just), and cable is performing well, although Brexit developments could buck the market at any moment and May is sticking to her guns on the Irish border, recently saying that she prefers no deal to a Canadian style outcome.
EUR/USD levels
EUR/USD Analysis: recovering below 1.1800, waiting for the Fed
The pair is consolidating below the the first major retracement level (38.2% at 1.1780) of its February-August decline but above the support of between 1.1720 and 1.1700. The 1.1790/1.1803 resistance area is to cap again today but bulls can target a test of the 1.1853 midJune high ahead of the 1.1904 55 week ma.
“We continue to view the August low at 1.1301 as a significant turn for the market. Minor support comes in at the 1.1750/34 late July and August highs. The market stays bid above the 1.1637 near term support line. The cross will need to drop sub 1.1508 to alleviate immediate upside pressure,”
analysts at Commerzbank explained.
EUR/USD next attempt to move higher will be harder – Confluence Detector
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