EUR/USD Bullish Channel Supports Buying – Quick Trade Setup!
Arslan Butt • 2 min read
The EUR/USD pair closed at 1.17334, after placing a high of 1.18076, and a low of 1.17316. Overall, the movement of the EUR/USD pair remained bearish throughout the day. In the early trading session on Tuesday, the EUR/USD currency pair moved to an 11-day high, but it was unable to remain there for long, and it started to reverse its direction, on the back of the strong US dollar. The greenback was strong across the board, due to Trump’s latest comments related to US stimulus measures. The bearish movement in the EUR/USD pair could also be attributed to the ECB president’s latest depressing comments on Tuesday.
In the early trading session, the EUR/USD pair continued to follow the bullish trend of the previous day, where the dollar was weak due to Trump’s illness, and its rival, the Euro, was strong, due to better-than-expected Retail Sales data.
However, after the market’s attention shifted from Trump’s health to the US stimulus package, the EUR/USD pair started to decline in the late trading session. The talks between House Speaker Nancy Pelosi and US Treasury Secretary Steven Mnuchin continued for the day, but only showed slow progress.
However, the talks are progressing slowly, and in his speech, Fed Chair Jerome Powell also urged US Congress to deliver the stimulus package soon, as the economy is in trouble. But US President Donald Trump has prevented his Republican Party from negotiating any further with the opposition Democrats, as – according to Trump – they are not negotiating in good faith. He has called off negotiations for the next round of stimulus measures till after the election, giving the US dollar a boost. The rising US dollar weighed on the EUR/USD pair, causing it to start declining.
On the data front, the German Factory Orders were released at 11:00 GMT, showing an advance to 4.5%, compared to the projected 3.0%, which supported the Euro and capped further losses in the EUR/USD pair. From the US side, the Trade Balance for August dropped to -67.1B against the expected -66.2B, weighing on the US dollar and limiting further losses for the currency pair.
The President of the European Central Bank, Christine Lagarde, said on Tuesday, that she feared that the economic recovery in the Eurozone would not be V-shaped. Instead, it could be shaky, given the rise in the number of coronavirus cases throughout the region. These depressing comments from the ECB president put further pressure on the EUR/USD pair.
However, the pair’s losses remained limited, due to an improved risk sentiment in the market on Tuesday. The latest news about a potential coronavirus antibody drug from Vir Biotechnology and GSK has entered its Phase 3 clinical trials. The initial results of this antibody drug showed that infected cells were killed, and the virus was neutralized. The possibility of the same results in the Phase 3 clinical trials lifted hopes in the market and supported the risk sentiment, helping to cap further losses in the EUR/USD pair.
Daily Technical Levels
Pivot Point: 1.1758
On the technical side, the EUR/USD pair is trading with a bullish bias at around the 1.1760 level. The closing of candles above the 1.1760 level is likely to drive the bullish trend in the direct currency pair until the next resistance area of 1.1800. On the 4-hour timeframe, the EUR/USD has also formed a bullish channel that supports the buying trend in the EUR. The idea is to take a buying trade over 1.1760 or a sell trade below 1.1760, to target a quick 40 pips on either side. Good luck!