Storm Escalates! EUR/USD Downtrend Remains Intact

Summary:

Geopolitical risk premiums persist, providing some support for the U.S. dollar as a safe-haven currency, which in turn weighs on the euro/dollar exchange rate.

SELL EURUSD

EXP

TRADING

1.14345

Entry Price

1.12000

1.16000

1.14236 -0.00123 -0.11%

0.0

Pips

Flat

1.12000

Exit Price

1.14345

Entry Price

1.16000

Fundamentals

On the euro front, overall business and corporate activity in the eurozone last month outperformed initial market expectations; the region’s economic growth appears to have stalled rather than entered a recession. Data released on Friday showed that the eurozone Composite Purchasing Managers’ Index (PMI), compiled by S&P Global, rose from 48.5 to 50, landing exactly on the 50-point threshold that separates expansion from contraction in economic activity.

The June nonfarm payroll data released by the U.S. Bureau of Labor Statistics (BLS) sent shockwaves through global financial markets. Rather than presenting a clear-cut picture, the report revealed an extremely polarized and bizarre pattern: on the one hand, a “cliff-like collapse” in monthly hiring; on the other, “stubborn resilience” in the unemployment rate and wage growth.

Technical Analysis

On the daily chart for the EUR/USD pair, the Bollinger Bands are widening downward, and the moving averages are diverging downward, indicating that the overall downtrend remains intact. The MACD fast and slow lines continue to trade below the 0 line, and the RSI stands at 42, indicating that the market is in a bearish mood. On the 4-hour chart, the Bollinger Bands are beginning to narrow, moving averages have flattened, and prices are facing resistance at the upper Bollinger Band. With the RSI at 55, market participants are largely adopting a wait-and-see approach. Strategically, look to sell on rallies.

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Trading Recommendation

Trading Direction: Sell

Entry Price: 1.143

Target Price: 1.12

Stop-Loss Price: 1.16

Support Levels: 1.14, 1.13, 1.12

Resistance Levels: 1.17, 1.2, 1.21

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Storm Escalates! EUR/USD Downtrend Remains Intact

Risk Disclosure