EUR/USD Extends Rotational Pattern

Posted Tuesday, April 21, 2020 by
Shain Vernier • 2 min read

The Greenback has entered rotation against the majors as the forex is showing signs of stability. With only a few hours left in the session, the USD has posted nice gains against the British pound, Swiss franc, and the Canadian dollar. Subsequently, the EUR/USD is showing moderate weakness as the Greenback rallies versus the majors.

Aside from downturns in GOLD and the safe-haven currencies, demand for U.S. Treasuries is holding firm. Today brought the auction of the 52-Week T-bill, which posted a sharp drop-off in yields. On a week-over-week basis, yields fell from 0.260% to 0.165% ― a significant loss and one that suggests investors are growing skeptical of the April rally in risk assets.

On the gold front, prices are off more than 1.25% and have fallen beneath the $1700.0 psychological barrier. This is a key event, as today’s selling has mirrored that of the equities indices. For the time being, it looks like institutional traders are moving into cash as the oil market meltdown continues to dominate sentiment.

Let’s dig into the EUR/USD daily technicals and see where the Greenback stands vs the euro.

EUR/USD Resumes Rotational Trend

In a Live Market Update from last Friday, I issued a short recommendation for the EUR/USD. The trade turned out to be a success as prices rejected topside resistance and posted a 35 pip gain.

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

Here are the key levels to watch for the EUR/USD as we approach mid-week trade:

  • Resistance(1): Daily SMA, 1.0877
  • Resistance(2): Bollinger MP, 1.0886
  • Support(1): 78% Macro Wave, 1.0748

Bottom Line: Although they aren’t always exciting to watch, slow markets can produce solid returns. If we see the EUR/USD extend to downside support, a long trade may set up by week’s end.

Until elected, I’ll have buy orders in the queue from 1.0752. With an initial stop at 1.0722, this trade produces 30 pips profit on a standard 1:1 risk vs reward ratio.

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