Basic Overview
Yesterday, we saw strong data from the US, with unemployment claims and retail sales figures coming in much better than expected. The initial reaction was bullish for the US dollar, but after a while the market started to fade this move.
The reason for this is that risk sentiment is generally negative for the US dollar, as the market focuses on positive global growth. Of course, the reasons behind selling the US dollar are not that strong, which is why the major currency pairs have been trading in a narrow range for most of the year.
But in the short term, changes in sentiment affect price action and the performance of the US dollar.
EURUSD Technical Analysis – Daily Time Frame
EURUSD daily
On the daily chart, we can see that the EUR/USD pair is struggling to break the 1.10 level as the price has been strongly rejected twice already. However, the price continues to make higher lows which is a bullish sign. Buyers will want to see the price rise back above the 1.10 level to rally towards the 1.1136 level, while sellers will look for major breakouts on the lower time frames to set the stage for further declines.
Technical Analysis of EUR/USD – 4-hour time frame
EURUSD 4 hours
On the 4-hour chart, we can see that we have a bullish trend line where the price bounced from yesterday after the bearish rally following the strong US data. Buyers are likely to continue to rely on this trend line to pave the way for new highs, while sellers will want to see a break below it to pile in for a drop to the 1.0882 level next.
EURUSD Technical Analysis – 1-Hour Time Frame
EURUSD 1 hour
On the 1-hour chart, we can see that we have a significant resistance area around the 1.0985 level where we can also find a minor counter trend line to converge. Buyers will want to see the price rise to increase bullish bets to new highs, while sellers should wait for a break below the trend line before considering selling. The red lines mark the average daily range for today.
Upcoming incentives
Today we wrap up this week with a consumer survey conducted by the University of Michigan.
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