Four Signs that EUR/USD Put in a Major Bottom Last Month
Matt Weller, CFA, CMT June 10, 2019 2:54 PM
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.
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