Treading Water Around July Lows

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EUR/USD Technical Highlights:

  • EUR/USD got here again to parity as anticipated and now appears to be like able to go a lot decrease
  • Dollar energy anticipated into the autumn as danger markets head south
  • EUR/USD sooner or later down the road seen as going in direction of 80c

Towards the center of the month we checked out EUR/USD because it sat close to resistance within the 10300s, and the anticipation was that we’d not less than come again to the parity, July low ranges to check it earlier than a attainable bounce may happen.

We’ve gotten the down transfer, however to date the euro is failing to garner a lot sponsorship within the 99s. The weak worth motion across the low means that extra promoting lies forward. How way more within the near-term is tough to say.

It could also be a marginal leg decrease or it could possibly be an enormous one. The considering is, nevertheless, that the 2000 all-time low within the euro at 8231 will come into play sooner or later. This may take a while, although, as it’s a long way decrease.

With the summer time rally in shares trying prefer it’s over, and throughout the context of what I imagine to be an prolonged bear market cycle in equities that began originally of the 12 months, an enormous greenback transfer may occur this fall.

This could or will not be sufficient to get the euro to the 2000 low, however it must be sufficient that the draw back can be reasonably aggressive. This outlook favors promoting rallies and congestion patterns that result in breakdowns.

In the near-term the underside trend-line of the channel relationship to the start of the 12 months may act as assist – it at the moment lies close to 9600. If that underside trend-line breaks we may see a considerable amount of acceleration as an orderly decline turns disorderly.

Even if EUR/USD bounces from right here, throughout the context of a robust downtrend, a rally is seen as more likely to rapidly fizzle out. It will take a robust transfer out of the downward channel and above the current excessive at 10368 to shift the bias, and even then we would wish to see any subsequent pullback present indicators of wanting to carry.

EUR/USD Daily Chart

EUR/USD Charts by TradingView

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—Written by Paul Robinson, Market Analyst

You can observe Paul on Twitter at @PaulRobinsonFX





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