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Today we shall be trading the EUR/USD asset. For this, we shall be using the IQ Options broker and the Trading Signals provided by ToolsTrades.
After hitting a new two-year high of 1.1916, EUR/USD is now trading in the middle of today’s range at 1.1865 and needs a new driver to make or break the recent rally. With the US dollar, the main influence on the pair, Friday’s US Jobs Report is now key and will likely spark a fresh bout of volatility. Wednesday’s ADP report was a mixed bag with the July employment change disappointing – 167k vs expectations of 1500k – while the June number was revised sharply higher to 4314k from a prior 2369k. Last month’s nonfarm payrolls showed employment surging by 4.8 million in June, beating all analyst expectations by a wide margin. US President Donald Trump said yesterday that big jobs number was coming on Friday, so expect volatility in US dollar-related pairs. The data and events calendar and release times need to be closely watched for the rest of the week and fundamental analysis remains key.
EUR/USD is likely to tread water ahead of tomorrow’s release and any downside is likely to be limited. The pair have made higher highs and higher lows all week, while the CCI indicator shows that the market is no longer overbought. All three moving averages remain supportive and it will take a decent rally by the US dollar to push the pair much below 1.1800 and the recent double-low area just below 1.1700.
EUR/USD Daily Price Chart (January – August 6, 2020)
While EURUSD is being moved by the US dollar, EUR/GBP is being guided lower by a stronger British Pound. The UK currency is pushing aside concerns over the EU/UK trade talks and the recent uptick in new COVID-19 cases and is starting to pullback some of the recent losses seen in most GBP-pairs. GBP/NZD is up eight big figures from it’s late-July multi-month low, GBP/CAD is also up to eight big figures from its mid-July low, while GBP/USD is up nearly 10 big figures from the end of June.
EUR/GBP is now struggling to break back above its 20- and 50-day moving averages and is back below 0.9000 and moving lower. Two recent lows around 0.8975 are coming under threat which would leave the mid-July low at 0.8924 vulnerable. Volatility in the pair remains low and a slow grind lower may continue.
EURUSD might have carved a potential top around 1.1909 levels last Friday. As a follow-through, it had dropped to 1.1700 before pulling back. As we prepare to publish this intraday update, EURUSD trades around Fibonacci 0.786 of its recent drop. A bearish reversal remains high probability as long as EURUSD holds below 1.1909 highs. A potential Wave 3 lower would push towards 1.1350 marks, going forward. A break below 1.1167 support will confirm that EURUSD has turned lower over the long term and that a meaningful top is in place at 1.1909 already.
Remain short, stop @ 1.1960, target @ 1.1350 and 1.1167.
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Risk Disclaimer: Trading Forex or any CFD products may not be suitable for all investors and they must evaluate their risk appetite. The above article should not be construed as trading or investment advice as it is solely for education and information purposes only. Trading might incur a loss of capital and hence investors might be required to gain further knowledge regarding the risks involved. Leverage should be used wisely.
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