Four Signs that EUR/USD Put in a Major Bottom Last Month

Looking ahead, the next hurdle for EUR/USD bulls will be the 200-day moving average near 1.1370. A confirmed break above that barrier opens the door for another leg up to the mid-1.14s or even 1.1500 next. To the downside, the near-term bullish bias remains intact above previous-resistance-turned-support near 1.1270.

The US dollar is in rally mode at the start of the US session, boosted by this weekend’s news that President Trump was “indefinitely suspending” tariffs on Mexico after an immigration deal was reached late Friday (see my colleague Matt Simpson’s report “US-Mexico Immigration Agreement Boosts Sentiment At The Open | MXN, SPX” for more). While the greenback ticking higher today, it remains well below its pre-NFP report levels, with traders now pricing in an over 80% chance of a rate cut by the end of July.

Turning our attention to the world’s most widely-traded currency pair, there are four technical signs that EUR/USD may have put in a major bottom late last month:

1) Rates bounced twice from support in the 1.1110 area, forming a classic “double bottom” pattern

2) …This setup was accompanied by a bullish divergence in the RSI indicator, signaling that the selling pressure was drying up and hinting at a potential reversal back higher.

3) So far this month, EUR/USD has rallied to put in a “higher high”

4)breaking above bearish trend line in the process.

Source: TradingView, GAIN Capital

Looking ahead, the next hurdle for EUR/USD bulls will be the 200-day moving average near 1.1370. A confirmed break above that barrier opens the door for another leg up to the mid-1.14s or even 1.1500 next. To the downside, the near-term bullish bias remains intact above previous-resistance-turned-support near 1.1270.


Related Articles

Join our live webinars for the latest analysis and trading ideas. Register now

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.

For further details see our full non-independent research disclaimer and quarterly summary.