EUR/USD: 1.10 finally fell. What's next? 🤔
Hi traders, the EUR/USD pair managed to break above 1.10, reaching the highest level since early April.
The euro benefited from EC's joint recovery fund (although there are still a lot of questions open), and the US dollar weakened on persistent risk-on flows.
What's next for the pair? Here's our view. Let me know what you're thinking of the pair in the comment section below 👍
Technicals: The EUR/USD pair remains in a long-term downtrend unless we see a decisive break above 1.1150, which is also the first resistance level to keep an eye on. The 1.1150 level also aligns with the 61.8% Fib level, which will likely going to be a tough barrier to the upside.
Micro-Economic Surprises: Recent reports from the eurozone show a nice pick-up, with Services and Manufacturing PMI beating expectations. In the US, GDP q/q, unemployment claims and pending home sales missed forecasts.
MES Ratings: EUR 8/10 (Bullish), USD 4/10 (Neutral).
Flows: While waiting for tomorow's new CoT release, the previous release was heavily bearish for the EUR. All market participants increased their bearish bets on the single currency, and open interest rose by 2.5k as well. However, this week's recovery fund news could change those numbers in the new report.
Flows Ratings: EUR 1/10 (Bearish), USD 8/10 (Bullish)
Correlations: The second chart shows current correlations with 2y yield differentials and Gold. The price followed yields nicely, but Gold keeps diverging from the current rate, pointing to weakness in the short run.
Risk Sentiment: Analyzed separately.
How to Trade?
I believe that markets, in general, aren't in tune with current fundamentals. Rising US-China tensions could soon lead to a deterioration in risk sentiment, and overly confident eurozone investors seem to neglect weak market data coming from the single market.
Given the technical importance of 1.1150, we'll look for signs of weakness and a pullback to the 1.10 level, at least in the short run.
Please hit the "LIKE" button if you enjoyed our analysis. Thanks! 👍
The euro benefited from EC's joint recovery fund (although there are still a lot of questions open), and the US dollar weakened on persistent risk-on flows.
What's next for the pair? Here's our view. Let me know what you're thinking of the pair in the comment section below 👍
Technicals: The EUR/USD pair remains in a long-term downtrend unless we see a decisive break above 1.1150, which is also the first resistance level to keep an eye on. The 1.1150 level also aligns with the 61.8% Fib level, which will likely going to be a tough barrier to the upside.
Micro-Economic Surprises: Recent reports from the eurozone show a nice pick-up, with Services and Manufacturing PMI beating expectations. In the US, GDP q/q, unemployment claims and pending home sales missed forecasts.
MES Ratings: EUR 8/10 (Bullish), USD 4/10 (Neutral).
Flows: While waiting for tomorow's new CoT release, the previous release was heavily bearish for the EUR. All market participants increased their bearish bets on the single currency, and open interest rose by 2.5k as well. However, this week's recovery fund news could change those numbers in the new report.
Flows Ratings: EUR 1/10 (Bearish), USD 8/10 (Bullish)
Correlations: The second chart shows current correlations with 2y yield differentials and Gold. The price followed yields nicely, but Gold keeps diverging from the current rate, pointing to weakness in the short run.
Risk Sentiment: Analyzed separately.
How to Trade?
I believe that markets, in general, aren't in tune with current fundamentals. Rising US-China tensions could soon lead to a deterioration in risk sentiment, and overly confident eurozone investors seem to neglect weak market data coming from the single market.
Given the technical importance of 1.1150, we'll look for signs of weakness and a pullback to the 1.10 level, at least in the short run.
Please hit the "LIKE" button if you enjoyed our analysis. Thanks! 👍
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