Fundamentals Nullify EUR/USD Bid…

The EUR/USD can’t seem to catch a substantial bid as macro fundamentals from the Euro area have been printing worse than expected. Manufacturing data from Germany have put the Euro giant in a technical recession, Italy has printed consecutive PMI data hinting a recession, UK Service and composite PMI hovering around recessionary level of 50.1 and 50.3 respectively. Geopolitical and political risks with Brexit and the yellow-vest protest in France mounts continuous pressure on the EUR.

A plausible asset to sell the Euro would be EUR/USD as we have highlighted in our Monday’s trade setup why we think the USDollar would be bullish on the short-term. Technically, on the Daily Chart, price has recently bounced off a resistance level in what seem to be a wedge/symmetrical chart pattern [see D1 chart]. Traders can follow this recent price action as it expected that the possible next target would be at least the support level/area of this wedge.

Fig 1: Daily (D1) EUR/USD Chart

EUR/USD

Sell @ current market price (instant execution)

Stop: 1.15185

Limit: 1.1300

 

Conversely, we are not oblivious to the fact that the Fed is in the quest to protect risky-assets which in effect would drive USDollar valuation lower. Should Jerome Powell further reiterate the current uber-dovishness of the apex bank we should expect a significant short term upward risk in EUR/USD, so traders are advised to always use a stop loss.

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