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Fundamentals

During the Asian session on Wednesday (August 9), EURUSD oscillated in a narrow range and is currently trading around 1.0960. The Euro is under double pressure due to the strengthening of the dollar index and the poor performance of its own economic data. The Euro has been weak for most of the last week, which rose to around 1.1050 from the 1.0920 area on Friday after the release of the weaker-than-expected US Non-Farm payrolls. However, a series of economic data released by the Eurozone last week did not perform satisfactorily, indicating that the market has increased concerns about the economic outlook of the Euro area due to the impact of high-interest rates. The divergence in economic performance in Europe and the US weighed on the Euro. At the beginning of the week, US bonds drove the dollar higher, and EURUSD fell again to around 1.0950. In addition, the ECB's attitude is also quite divergent, and a number of data indicate that inflation in the Eurozone is declining, further strengthening expectations that interest rate hikes will be suspended in September, which is negative for the Euro. However, it is too early to draw conclusions, and it is necessary to pay attention to the statements and data performance of ECB officials. Recently, EURUSD has largely followed the fluctuations of the US dollar index, and the oscillation range for the week is expected to be 1.0900-1.1060.

Data: Eurozone GDP recorded 0.6% in the second quarter, which is better than expected but down from the previous month. The manufacturing PMI remained low, with the non-manufacturing PMI slipping to 50.9, lower than expected and prior. Retail sales unexpectedly recorded a 0.3% MoM decline.

Traders this week need to focus on the US Consumer Price Index (CPI) data due on Thursday. As Energy prices surged rapidly recently, inflation is likely to rise. But if inflation is not strong, perhaps Euro bulls will enter the market again.

Technical Analysis

Trading at the daily timeframe, EURUSD oscillated in a weak trend with all moving averages running upwards. As the MA5 crosses MA10 and MA20 upwards and the MACD indicator still forms a wide death cross, the price is generally biased toward the bears. Currently, EURUSD is around the MA5 and the MA10, testing the support in this area. A successful breakthrough will drive the lower support to the recent low at 1.0910 and the integer mark at 1.09. According to the Euro trend, the price is still in the double box and near the lower edge. For changing positions, perhaps the strength of the support is enough for the time being. The resistance above should focus on the integer mark at 1.10 and the MA20 at 1.1050.

Aggressive traders can try long with small positions around 1.0960, with the stop loss at 1.0930. The first target is to take profit partially at 1.1060 and change the remaining position to break even. And the second target should look at 1.1150.

Trading Recommendations

Trading Direction: Long

Entry Price: 1.0930

Target Price: 1.1060

Stop Loss: 1.0900

Support: 1.0900/1.0850

Resistance: 1.1060/1.1150