Português
Español
русский
The euro currency came roaring back against the US dollar on Friday after bulls defended critical weekly support around the 1.2080 level, and the United States monthly retail sales report came in much weaker than market commentators have been expecting.
Currency markets have a clear theme now, softer US data means US dollar weakness because the expectation amongst market participants is that the FED will keep printing money and hold rates low while the economic data underwhelms.
The fact that inflation is growing in a relatively low growth environment was enough to keep the US dollar contained. I suspect US dollar weakness will be a constant theme over the coming weeks as market appear to have got way ahead of themselves earlier when the CPI print came in red hot.
Bulls clearly have their eye on the yearly high now. This is what the technicals are alluding to after the recent defence of key trendline support around the 1.2080 price zone last week.
Laying out the path ahead, the EURUSD pair has little in the way of technical resistance once the 1.2200 level is breached. This would place the 1.2300 level squarely in focus, and the current yearly high, which is a touch under the 1.2345 mark.
In order for this bullish target to be achieved we probably need to see a broad-based US dollar decline this week. The US dollar index is in a very vulnerable position, so more weakness is highly possible.
Looking at retail sentiment, bearish sentiment towards the EURUSD pair has climbed since last week, and not sits at 63 percent. Typically, fading the retail crowd has proved to be a profitable strategy. If bearish sentiment towards the EURUSD continues to increase next week I would suggest a run towards the 1.2200 to 1.2300 area is highly probably.
EURUSD Short-Term Technical Analysis
The EURUSD pair has bounced sharply from the top of a large descending broadening wedge pattern that the EURUSD pair tested last week last week. This is extremely bullish over the short-term.
Looking at the size of the large descending broadening wedge it is likely that the EURUSD pair could towards the current yearly around 1.2340 and maybe even the 1.2400 level.
See real-time quotes provided by our partner.
EURUSD Medium-Term Technical Analysis
Looking at the daily time chart, a bearish head and shoulders pattern remains the central focus. The recent recovery from the 1.2160 level will keep bulls hopes alive that the pattern will be invalidated.
Traders should be ultra-cautious about becoming too bearish towards the EURUSD as the overall trend in the EURUSD pair is still distinctly bullish on the lower and higher time frames.
Therefore it is likely that the head and shoulders pattern could be invalidated this week or potentially this month. A massive rally towards the 1.2800 level could happen if this scenario occurs.
See real-time quotes provided by our partner.
