EURUSD
Last week the US Dollar had a strong overall performance, although after a solid non-farm payroll jobs report, the US dollar rally lost ground as the market corrected into the close on Friday. It’s too early to judge whether there is a bearish reversal for the Greenback, however, a strong risk-on sentiment could limit the dollar’s upside efforts going forward.
This week’s news from the Eurozone generally favors the economic outlook for the region. Eurozone economic confidence came to 117.9 in June, above forecasts and the highest level in more than two decades, after 114.5 in May. This success from the reopening of the economy was evident in the services confidence component, which jumped to 17.9 in June from 11.3 in May. In addition, other important activity data also show encouraging evidence of the impact of the opening of the economy. German retail sales in May rose 4.2% m/m, reversing most of the April sales decline, while French household consumption rose 10.4% m/m, reversing all of April’s declines.
In June the headline CPI fell to 1.9% year-on-year, while the core CPI also fell to 0.9% year-on-year. Inflation trends are likely to pick up in the coming months due to the underlying effect of some shortages and supply bottlenecks. On Thursday, ECB policymakers will meet in Frankfurt in a bid to finalize a review of the institution’s strategy.
Technical Levels
EURUSD closed the week above the 1.1846 support (previous week’s low) at 1.1865, slightly up +0.14% on Friday. The total decline last week was 0.53%. The intraday bias remains inclined to the downside for the next wave of declines which is limited by the temporary low of 1.1806. If there is a break of this low, the asset will test the next low at 1.1703. This condition is supported by the average price movement below Kumo and AO which are still in the selling area despite the apparent unconfirmed temporary divergence of the AO and the low price descending from the chart.
EURUSD, H4
Friday’s candle, although pin bar in shape, has not surpassed the previous Thursday’s high; this at least indicates limited interest from the bulls. A price move above the 1.1830 minor resistance will target 1.1974, but as long as the price remains below the 1.2000 psychological level the bearish pressure will remain real for some time to come.
In the larger period, the overall trend is still supported by the support level 1.1600. Sustained downside movement from current positions will target 1.1703 and if strong will equalize 1.1601. A move below 1.1601 would strengthen the retracement to 50.0% (1.1500) levels first and then 61.8% (1.1287). As long as the 1.1600 level holds, consolidation on the upside will continue for the trading space to narrow further in a triangle pattern. A move above 1.2000 would be a continuation of the March 2020 rebound but will face resistances at 1.2265 and 1.2349.
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Ady Phangestu
Analyst – HF Indonesia
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