The EUR/USD Makes A Hasty Return To 1.1900

Posted Thursday, May 10, 2018 by
Shain Vernier • 2 min read

The 1.1900 handle is standing tall for the EUR/USD. Amid a moderately disappointing U.S. CPI number, the USD is beginning to lag against the majors. Losses against the Canadian dollar, Euro, and Japanese yen have highlighted the forex session.

In coming hours there are two secondary market movers that will attract the attention of traders and investors. While they are not primary fundamentals like the CPI report from earlier, the market will be watching the following releases:

Event                                                    Time

30-year Bond Auction                           1:00 PM EST (underway)

U.S. Monthly Budget Statement         2:00 PM EST

The U.S. budget has been a hot topic in Washington D.C. lately. Concerns over exorbitant government spending have come to the forefront. Heated debate regarding cuts to social programs has consistently made headlines throughout early May. The budget for April is expected to come in at a positive $193.75 billion, up from -$209.00 billion last month.

Budgets and debt go hand-in-hand. With the Congressional midterm elections coming up in November, related statements and data may spike market volatility. Any perceived disruption to the status quo will shake the valuations of many asset classes.

As the summer unfolds, institutional money will begin to decide how to play the coming election cycle. If U.S. government debt becomes a huge issue for Congressional candidates, then we could see any number of scenarios play out for the Greenback.

EUR/USD Technicals

Today has brought a significant rally for the EUR/USD. After the bear run of the last several weeks, Thursday’s action has been a welcome reprieve for Euro bulls.

EUR/USD, Daily Chart

At press time, price is rotating just above the 1.1900 level in a relative no-man’s-land. Here are three levels to watch for the remainder of the week:

  • Resistance(1): 38% Retracement of Bear Run, 1.2048
  • Support(1): Psyche Level, 1.1900
  • Support(2): Swing Low, 1.1822

Overview: The two support and resistance levels that jump of the page are the 38% retracement of the current bear run (1.2048) and the macro 38% retracement (1.1708). Currently, I have orders queued up from the macro support level. Read more about the trading plan here.

More than likely, we are in for a rotational Friday with 1.1900 being a key to the action. If price does break out, then either a short from resistance or long from support will be in play.

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