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Fundamentals

During the Asian session on Tuesday (July 18), EURUSD is oscillating to the upside and is currently trading around 1.1260. U.S. bond yields fell last week, posting their biggest weekly decline this year, and the dollar also fell to around 99.5. However, benefiting from the weakening US dollar, non-US currencies have appreciated to a certain extent, the most beautiful rise is EURUSD. Last week was EURUSD's best week of 2023 and the second largest gain since the pair bottomed out last September, which has now created a 9-day bullish pattern, rising from 1.0830 to the 1.1280 line. Under the premise that the fundamentals have not changed too much, the rise of EURUSD seems to be somewhat excessive in the short term, so the probability of the next pullback is extremely large. For one thing, the dollar's decline in important support has decelerated at the moment, and investors are still doubtful about the pause in rate hikes of the Fed. Therefore, there is a technical need for the dollar index to rebound. For another, as the US economy has shown strong resilience, and the labor market has been strong, one inflation data is not enough to change the Fed's monetary policy, let alone make the Fed more dovish rhetoric and commitment. Therefore, the market is now too ahead of the curve, and there is a possibility of correction.

Traders today need to focus on the US retail sales report for June, which is unlikely to influence the direction of monetary policy.

Technical Analysis

Trading at the daily timeframe, the price has shown 9 consecutive white bodies and stood firm at MA5, MA10, and MA20, with the moving average bulls tied and the MACD golden cross still widening, expressing a clear bullish trend. However, we also notice that the MACD indicator has now penetrated deep into the overbought zone. At the same time, the price is currently near the strong resistance zone of 1.1280 Fibonacci retracement of 61.8% of the entire decline in 2021-2022, and Doji stars have appeared continuously. It will probably be another long shadow structure today, and the price may have appeared a weak pattern in the short term. Resistance remains unchanged in the 1.1280-1.1300 zone. In terms of support, the preliminary anticipation is at the previous high of 1.1100. If it can break below effectively, the price will test the dense support zone of 1.06.

Aggressive traders can try short positions around 1.1300, with the stop loss at 1.1400. The first target is 1.1100, where you are able to take profit partially and set the remaining position to break even. And the second target is 1.0850.EURUSD: Can the Pair Keep Rising After 9 Days of Appreciation?

Trading Recommendations

Trading Direction: Short

Entry Price: 1.1300

Target Price: 1.0900

Stop Loss: 1.1400

Support: 1.1100/1.0850

Resistance: 1.1300/1.1500