The relatively strength of EUR/USD continue to shine even though prices are lower than before, as EUR/USD has fared better than fellow risk currencies AUD/USD and NZD/USD, and tying with GBP/USD in terms of percentage loss (EUR/GBP is relatively flat). This is not surprising as we’ve previously identified EUR/USD as being inherently the most bullish currency pair amongst majors. This title will need to be re-evaluated as Pound dollar is also doing rather well – recovering a huge portion of the losses suffered after the higher than expected unemployment rate was announced yesterday. But certainly, if a trader have went with EUR and pared it with fellow risk currency instead of USD or other safe havens, they would be in the money or at worst around breakeven.
If you have went long EUR/USD, you may be slightly underwater right now (if you are still holding onto the positions that instead of bailing out when prices traded below 1.374 yesterday), but the bullishness of EUR/USD is still intact. Prices has since rebounded off the bottom go the wedge, and is currently pushing towards the soft resistance of 1.376. However, it remains to be seen if further bullish moves are possible given that Stochastic readings is close to Overbought and has already started to flatten. Also, given that global risk appetite is bearish now, it will take extraordinary effort for EUR/USD to carve out higher highs this week, and may be something that is too tough for something that is running on pure bullish sentiment alone to achieve.
That being said, we should still continue to expect EUR/USD to stay buoyant, and even if price move lower from here once more, it is likely that the Wedge bottom will provide adequate support. Failing which, 1,3715 should be able to stem the bearish tide and if that breaks we will need to re-evaluate the notion that EUR/USD is inherently bullish as the bullish momentum will be invalidated.
Daily Chart remains mostly like the same because price level has not really changed much since yesterday’s analysis. Price can ostensibly move all the way to 1.3815 resistance, but downside risks such as Stochastic readings being Overbought and lack of fundamental bullish drivers continue to threaten the prospect of current bullish rally. As such, conservative traders may wish to wait for stronger signs of bullish conviction (e.g. price breaking the 1.3815 resistance or for strong bullish fundamentals to emerge before participating in this current bull run. Alternatively, bears waiting for the materialization of the previously mentioned downside risk will need to be patient for signs of bearish reversal before committing.
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