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Fundamentals

During the Asian session on Tuesday (August 22), EURUSD fluctuated in a narrow range and is currently trading around 1.0900.

EURUSD started its rally yesterday and seems to be gaining ground in the case of oversold. Over the past month, EURUSD has maintained a bearish trend, dropping from 1.1275 to the lowest 1.08450. Last week, Bulls and Bears have been betting around 1.0900. Meanwhile, bulls believed that the Fed should be less aggressive in the future, while bears argued that negative risk sentiment will continue to guide the dollar stronger. As the market declined, an oversold trend has appeared. The role of the previous low at 1.0850 as well as the support level, is becoming more obvious. And there is a technical need to continue to rebound and repair. However, as the current technical picture is slightly weaker than the fundamentals, the state of the market risk appetite is still the focus of the next step. If there is a hint of risk appetite, EURUSD may be able to extend the rebound. On the contrary, the height of the rebound will be limited. Investors need to keep a close eye on the trend of US Treasury yields.

Data: Eurostat released data on August 16, showing a rebound of Eurozone industrial production in June, slightly boosting overall economic growth and ending an otherwise weak quarter. Specifically, Eurozone industrial production rose 0.5% MoM in June, above the expectation of 0% and the previous reading of 0.2%. while the YoY value contracted -1.2%, better than the expected -4% and the previous value -2.2%. The final GDP value for the second quarter was confirmed, up 0.3% QoQ and 0.6% YoY.

Data for investors to see today includes the manufacturing PMI data on Wednesday and the German business sentiment data on Friday.

Technical Analysis

Trading at the daily timeframe, EURUSD kicked off a sharp rally at the low levels on Monday, repairing the pessimism of bulls and engulfing most of losses last week with a long white body. The market will probably maintain the rebound trend today. Currently, the price has stood on the MA5 and MA10, and the MACD indicator has also formed a golden cross trend at a low level. The short-term market may have changed to a bull market. Traders should still focus on pullbacks to go long at the moment. If the price can stand above the MA20 at 1.0950, it may completely change the previous weak pattern and start to reverse.

Aggressive investors are advised to test long with a small position at around 1.0900. The stop loss is 1.0850, and the first target is at 1.1070, where you can take profit partially and move your stop loss to break even. The second target is 1.1150.

Trading Recommendations

Trading Direction: Long

Entry Price: 1.0910

Target Price: 1.1060

Stop Loss: 1.0870

Support: 1.0880/1.0850

Resistance: 1.1070/1.1150