{x} | Trading.live

Fundamentals

During Thursday's (July 28th) Asian session, EUR/USD oscillated narrowly, and it is currently trading at 1.0950 with oscillations. Yesterday, the EUR/USD fell sharply because the U.S. economic and employment data exceeded expectations significantly, pulling up the USD rapidly. Besides, during the monetary policy meeting, as expected, the ECB raised interest rates by 25bps, but by claiming "will ensure that interest rates reach a sufficiently restrictive level" to "Interest rates will remain at a sufficiently restrictive level for as long as necessary". Such a change was interpreted as dovish by the market. Then, the USDX rebounded to 102, while the EUR/USD fell quickly and dropped below 1.10.

Data: U.S. annualized real GDP for the second quarter rose 2.4% QoQ, while it was expected to rise 1.8%, and the previous value rose 2%. Personal consumption expenditures rose 1.6% QoQ and it was expected to grow 1.2%, the previous value increased by 4.2%. Meanwhile, U.S. core PCE annualized price index rose 3.8% QoQ, and it was expected to rise 4% with the previous value rising by 4.9%. Moreover, U.S. durable goods orders for June grew by 4.7% MoM, the largest growth rate in the past 6 months. It was far exceeding market expectations by growing for the fourth consecutive month. Furthermore, U.S. initial jobless claims for the week ended July 22nd were 221,000, a five-month low. The expected number was 235,000 and the previous number was 228,00, creating a new weekly low for nearly five months. In addition, the European Central Bank raised 25 basis points for the 3 major interest rates. It was the ninth consecutive interest rate hike and in line with market expectations, while interest rates reached the highest level since September 2008.

Technical Analysis

Regarding the daily chart, EUR/USD rebounded from lows and reached 1.1150, but then plunged rapidly, once reached 1.0950 after the data was released, closing negatively. Instantly, the rebounding trend turned weak, and such a plunge eased the bearish risks. Now, there is a technical bearish pattern with the MACD forming a death cross, and the SMAs are dispersing. Nonetheless, EUR/USD is at the lower area of an ascending triangle channel, suggesting possible support. Investors should keep a bearish view but not go short now. It is recommended to go short after EUR/USD rebounds.

Trading plans: Aggressive investors should go long with small positions at 1.0970 by setting the stop-loss at 1.0950. The first target will be 1.1060, where investors could take profits partially and move the stop-loss to breakeven. The second target should move to 1.1150.

Trading Recommendations

Trading direction: Long

Entry price: 1.0980

Target price: 1.1100

Stop loss: 1.0950