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EUR/USD Rallies, Holding Firm Above 1.1600

The EUR/USD is in the process of posting a nice recovery as the forex weekend nears. Bulls have been in control of this market today, driving price north of the 1.1600 level. This is a welcome reprieve for backers of the Euro. After Thursday’s 200+ pip selloff in the EUR/USD, closing the trading week with a green candle is a positive sign.

EUR/USD Fundamentals

From a fundamental standpoint, there are three primary issues impacting EUR/USD valuations:

  • Wednesday’s U.S. FED announcements alluding to four rate hikes for 2018
  • ECB stating that their enormous bond-buying program will conclude in December
  • U.S./China tariff announcements and rekindled global trade war fears

These three items are weighing hugely on pricing of both the USD and Euro. Extensive rate hikes and reduced debt purchases will work to strengthen both currencies. However, trade war fears aim to derail the Greenback, possibly forcing the FED to rethink a fourth rate hike later this year.

A big wildcard facing the Greenback is the projected U.S. economic growth for the near term. The June 28 release of U.S. Annualized GDP will be a precursor of things to come. Projections will be well above the 2.2% previous release — if this number lags, uncertainty will once again creep into USD pricing modules.

EUR/USD Technicals

Thursday’s blockbuster downtrend was something to behold. Support levels were repeatedly shattered as sell orders hit the market in huge numbers. If you took some money from the move, kudos!

EUR/USD, Daily Chart
EUR/USD, Daily Chart

Here are two levels to keep an eye on for the rest of today and Monday’s session:

  • Resistance(1): 38% Retracement Thursday/Friday Range, 1.1661
  • Support(1): Swing Low, 1.1510

Bottom Line: Next week features a wide-open economic calendar for the USD. I will be looking to sell the 38% retracement of this week’s Thursday/Friday range (1.1661). With an initial stop at 1.1676, this trade yields 15 pips using a 1:1 risk vs reward management plan.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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