EUR/USD Extends Early-Week Gains Above 1.1800
Shain Vernier • 2 min read
A collection of subpar U.S. economic metrics have sent the EUR/USD higher for the session. Lagging Durable Goods Orders (June) and the rising House Price Index (May) have highlighted the impact that recent inflation is having on the USD. With the July Fed announcements about 24 hours away, it looks like forex players are happy betting against the Greenback.
For the past few months, inflation has been the key issue facing global finance and the forex. Today’s reports from the U.S. illustrate two of the consequences of a devalued USD:
Event Actual Projected Previous
Durable Goods Orders (MoM, June) 0.8% 2.1% 3.2%
Core Durable Goods Orders (MoM, June) 0.3% 0.8% 0.5%
House Price Index (YoY, May) 18.0% NA 15.8%
In short, the recent upward pressure on prices is beginning to stifle consumption. Durable Goods Orders for June came in well beneath May’s number and projections. Also, the House Price Index for May is up significantly year-over-year. At this point, it’s undeniable that prices are on the rise and some consumers are checking their spending.
With no Fed policy shift expected until Q2 2022 at the earliest, the tone of tomorrow’s announcements is going to be very important. If Jerome Powell and the FOMC signal that QE tapering is now on the table, the USD may post rapid gains against the euro. Right now, however, it’s all-systems-go for EUR/USD bulls.
Key Weekly Resistance Levels For The EUR/USD
It has been a strong session for the EUR/USD. Bids have consistently hit the markets as traders gear up for Wednesday’s Fed presser.
Here are two key resistance levels to watch for this pair:
- Resistance(1): Weekly SMA, 1.1926
- Resistance(2): 38% Macro Retracement, 1.1948
Bottom Line: The forthcoming 24-hours are going to be an interesting time for the EUR/USD. If the bulls continue to dominate the action, a shorting opportunity may come into play. As long as the swing low of 1.1751 remains intact, I’ll have sell orders queued up from 1.1917. With an initial stop loss at 1.1976, this trade produces 59 pips on a standard 1:1 risk vs reward management plan.