Economic sentiment didn't deteriorate further in Europe this month

EUR/USD Approaches Daily Resistance

Posted Wednesday, August 7, 2019 by
Shain Vernier • 1 min read

Four out of the past five forex sessions have been good ones for EUR/USD backers. Rates are up more than 200 pips, off yearly lows just above the 1.1000 handle. At this juncture, it appears that trade war fallout is driving institutional money to the world’s second-largest IMF reserve currency.

The economic calendar facing the EUR/USD is vacant for the remainder of the week, void of any primary Eurozone or U.S. market drivers. However, China’s CPI (July) to be released Thursday evening will be worth watching. Currency traders are searching for any hints as to who is winning the U.S./China trade war ― if we see Chinese CPI (July) lag the 2.7% expectations, a bump in the USD is possible. 

A bit later on today, the U.S. Treasury will auction off its 10-Year Note. Yields on the 10-Year Note currently stand at 2.064%; do not be surprised if yields fall beneath the benchmark 2% value. 

All in all, there are very few market drivers out this week that can turn the tides for the EUR/USD.

EUR/USD: Technical Outlook

Rates are on the rise for the EUR/USD and headed for a daily Quadruple Top formation at 1.1280-85.

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

Here are the levels to watch in this market for the near future:

  • Resistance(1): Quadruple Top, 1.1280 to 1.1285
  • Support(1): Bollinger MP, 1.1190

Bottom Line: Back in early July, the 1.1280 area served as formidable topside resistance for the EUR/USD. It appears that rates are once again destined to test this zone. Until elected, I will have sell orders in queue from 1.1274. With an initial stop at 1.1308, this trade produces 40 pips on a better-than-1:1 risk vs reward ratio.

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