Four Signs that EUR/USD Put in a Major Bottom Last Month
Matt Weller, CFA, CMT June 10, 2019 9:54 AM
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.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.