As my colleague Fawad wrote last week, EUR/USD is at a pivotal point. On a day when the economic calendar is light, the pair remained stuck near 1.1050. Headlines rule the day, and when news was released that Germany is mulling the creation of a shadow budget to increase public investment beyond restrictions of national debt rules if the outlook warrants, EUR/USD pushed from 1.1030 to 1.1057. It now looks like there is plenty of room to move up towards 1.1100.
EUR/USD remains in a long-term descending triangle, however on September 3rd, the pair created a hammer at trendline support on a daily timeframe. Although not textbook, with the bullish candle on the 4th one can argue this is a morning star candlestick formation, which is a powerful 3 candle reversal signal. Although there is a lot of time left in the day, if the pair closed above 1.1057 a bullish engulfing candle will be formed, which suggests the pair could move up to 1.1100, which is trendline resistance and the 38.2% retracement level from the July 25th high to the Sept 3rd lows. Above that, there is horizontal resistance and the 50% retracement level from the same time period near 1.1170. Support remain at September 3rd lows, at 1.0925.
Source: Tradingview, City Index
On a light data day such as today, always be on the lookout for headlines regarding Brexit and ECB. Although there have been several Brexit headlines today, none have noticeably affected EUR/USD. Also, Mario Draghi’s last meeting as ECB President is Thursday. It’s worth watching for headlines regarding the upcoming meeting.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.