Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Chart Of The Day: After Stellar July, EUR/USD Arrives At Critical Juncture

By Fawad RazaqzadaCurrenciesJul 31, 2020 14:57
uk.investing.com/analysis/chart-of-the-day-after-stellar-july-eurusd-arrives-at-critical-juncture-200444697
Chart Of The Day: After Stellar July, EUR/USD Arrives At Critical Juncture
By Fawad Razaqzada   |  Jul 31, 2020 14:57
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

This article was written exclusively for Investing.com

The EUR/USD extended its gains first thing this morning as investors digested early European data which showed, among other things, better-than-expected French GDP and consumer spending, as well as German retail sales. However, the EUR/USD then eased off the highs amid profit-taking from key levels ahead of month-end and after Eurozone GDP, which was released later, came in slightly below expectations with a print of -12.1% in Q2 vs. -12.0% expected.

As we end July, the EUR/USD is still looking quite strong and like it will end positively for the third consecutive month. This month's 5.6% rise is the largest one-month increase in the value of the euro against the dollar since September 2010. However, with coronavirus making an unwelcome comeback to parts of Europe, the currency may come under pressure again in August. It is also possible that the dollar could rise from the ashes, as virus cases in the US start to drop and the most populous states open up again. So, the EUR/USD’s rally could potentially end. 

But we will let the charts guide us, rather than taking a macro view on the direction of rates.

In fact, the monthly chart of the EUR/USD shows price has reached a critical technical juncture between around 1.1850 to 1.2000. Here, an old support and resistance area meets a long-term bearish trend line, derived from connecting the previous significant highs:

Monthly EUR/USD Technicals
Monthly EUR/USD Technicals

The EUR/USD is testing this monthly resistance area and, as the daily shows, the price is potentially reaching significantly “overbought” levels on the daily time frame, if the Relative Strength Index (RSI) is anything to go by:

Daily EUR/USD Technicals
Daily EUR/USD Technicals

Thus, given the above considerations, at the very least I would expect price to ease back a little on profit-taking from these overbought and technically-important levels. 

What happens next will depend to a great degree on the macro factors obviously, but from purely a technical point of view, the bulls would want to see a small retracement and a period of consolidation—for this would point to weak selling pressure. If this turns out to be the case, the EUR/USD may go on to break through the abovementioned resistance zone before heading towards the 2018 high at 1.2555.

However, a sharp retreatment from this 1.1850-1.2000 resistance zone would indicate strong downward pressure. If seen, I wouldn’t rule out a return to the point of origin of the breakout to about 1.1460-1.1500 in the coming weeks. 

Chart Of The Day: After Stellar July, EUR/USD Arrives At Critical Juncture
 

Related Articles

Andey Goilov
EUR/USD Is Standing Still By Andey Goilov - Jun 27, 2022

The major currency pair is rather neutral early in the week – the asset is trading at 1.0567.EUR/USD is barely moving – all comments left by the US Fed Chairman Jerome Powell last...

Marios Krausse
Bleak Economic Outlook By Marios Krausse - Jun 13, 2022

Welcome to a new trading and central bank rate-hike week. After an unexpectedly higher U.S. inflation reading last Friday, chances for a 75bp Federal Reserve rate hike at the...

Chart Of The Day: After Stellar July, EUR/USD Arrives At Critical Juncture

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Jagdeesh Rao
Jagdeesh Rao Aug 01, 2020 18:59
Saved. See Saved Items.
This comment has already been saved in your Saved Items
good info
Laeeq Ali
Laeeq Ali Jul 31, 2020 18:29
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sir, please remove CAD from this market..
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email