EUR/USD ripe for a pull back into trendline support

• EUR/USD has ended on Wall Street printing a fresh daily high, although lacking conviction. 
• The euro has been a head-turner of late, taking on the bears at monthly trendline resistance while the USD weakens against most of its peers.

At the time of writing, EUR/USD is trading at 1.1872 within the day’s range of 1.1828 and 1.1881.

The risks are skewed in the bear’s favour from both a technical and fundamental standpoint as market sentiment remains fragile due to EU travel restrictions and relations between the US and China.

The pair has reached a charting area that could well call for a phase of consolidation and a retest of downside structure, as illustrated below. 

Meanwhile, European and US stocks, which correlate to the risk-on factor of the euro, got off to a sluggish start despite the bid in Asian bourses following Chinese liquidity injection by the PBOC to support money markets and credit growth.

Elsewhere, the focus has been on fiscal negotiations which have stalled as well as the tensions between the US and China considering more restrictions on Huawei announced by the US.

Should stock markets give out on the various risks then the euro would come under pressure on a weak where the eurozone offers key data.

We have investor sentiment data for August, July Eurozone industrial production and the first revision to some of the 2Q20 GDP data. whereby the V shape narrative could come under scrutiny again.

Federal Reserve speakers and the Federal Open Market Committee minutes are lined up from where traders could gather some insight into the average inflation target debate.

EUR/USD levels

The single unit is through a trendline resistance which could allure bears to test the commitments of the bulls at this juncture.

The following daily chart shows the prospects of a bearish head and shoulders in the making, a typical reversal pattern following meaningful impulses.