With FED Chair Powell highlighting the risks of the COVID-19 new variant and that tapering QE is more or fewer data dependent the EURUSD pair staged a much-needed price recovery.
This week, the release of the ISM manufacturing survey and the Non-farm payrolls jobs report are going to be huge market-moving events for the US dollar if we take Chair Powell by his word.
Should we see worse monthly data that the July jobs and manufacturing reading market participants will likely continue to push back QE tapering expectations? The start of the week has already been a poor one as this week’s jobs and manufacturing data are predicted to be weaker.
Furthermore, we should continue to acknowledge that the ongoing spread of the COVID-19 variant and weaker seasonal data from Autumn to Christmas could present more problems for the greenback.
Sentiment towards the EURUSD pair has pulled back to more attractive levels for EURUSD bulls. The ActivTrader Market Sentiment tool shows that some 55 percent of traders are bearish towards the EURUSD.
Last week some 72 percent of traders were bullish towards the pair. Now that traders are turning bearish, while the EURUSD pair rises, I suspect more short-term upside is highly probable.
EURUSD Short-Term Technical Analysis
The EURUSD pair is much more bullish across the lower time frames after breaking above the former weekly high and also after cracking the technically important 1.1775 resistance zone.
A large, inverted head and shoulders pattern a 130-point upside projection has now formed while the EURUSD pair trades above the 1.1800 level. Minor corrective moves back towards the 1.1770 area will probably present buying opportunities.
EURUSD Medium-Term Technical Analysis
Looking at the daily time frame, massive amount of bullish MACD price divergence has built until the 1.2000 resistance level and I predict this divergence will eventually be reversed.
We should expect to see a test towards the 1.1930 level if bulls start to close the daily candle above the 1.1800 level. Overall, I am expecting more upside coming over the next few weeks.