فصل 17 07/10 EURUSD: Rising Momentum Has Not Been Continued, But the Bottom of the Range Has Been Formed
Abstract: The EURUSD fluctuated within a narrow range around 1.0950 on Monday. Following Friday's sharp rise, the EURUSD is in a consolidation stage as investors look for the next catalyst. The Sentix Investor Confidence Index in the eurozone recorded -22.5 in July, the lowest since November 2022.
Fundamentals
Data released today showed that the eurozone's Sentix Investor Confidence Index fell more than expected in July, touching a low since the European energy crisis in November last year, as the eurozone remains in recession and shows no signs of improving. Meanwhile, there was little positive news in terms of forward-looking expectations.
Manfred Huebner, managing director of Sentix, said that the question is, where may the improvement come from? Investors surveyed expect that central banks will further restrict monetary policy, while the U.S. economy, which has withstood the global recession, has not spread positively. Huebner specifically pointed out that the value of Germany, Europe's largest economy, was "very bad", and the overall index dropped by 7.3 points to-28.4, and the current situation and expected index also showed a similar sharp decline.
After last Friday's surge, the bullish breakthrough of the EURUSD in the consolidation range in June did not go too far, but there is still room for continuous upward development. The initial goal should be to rise above the 1.1000 level, and then rise further to retest the year-to-date high of 1.1110. Because it is still possible to raise interest rates again this month, and the door to raising interest rates in September may also be open. After that, interest rates may fall slowly, thus increasing the support of the EUR.
Technical Analysis
After last Friday's surge, the EURUSD failed to continue last week's strong upward momentum on Monday, and remained under pressure before the New York session, showing signs of turning its head downwards. Admittedly, failure to go higher again will weaken the prospect of a bullish height, but it will be a high probability event that the psychological barrier of 1.1000 is triggered again because the bottom of the range has been formed.
That said, after the June consolidation, the uptrend will easily break above the psychological barrier at 1.1000, which is closely followed by the threshold of 1.1100. Further up is the weekly high of 1.1184, a level supported by the 200-week SMA at 1.1180.
On the downside, the loss of the 55-day SMA at 1.0871 could trigger further downward momentum, initially to weekly lows at 1.0833, below which the downtrend would be further reinforced. Below 1.0800, the medium-term uptrend will be tested.
Overall, the uptrend will not change as long as the EURUSD stays above the key 200-day SMA. It is recommended to buy the dips.
Trading Recommendations
Trading direction: Long
Entry price: 1.0920
Target price: 1.1067
Stop loss: 1.0800
Deadline: 2023-07-24 23:55:00
Support: 1.0916, 1.0901, 1.0866
Resistance: 1.0975, 1.1012, 1.1055
