EUR/USD Price Forecast -Euro Bounces From Major Figure

The Euro has bounced from the 1.20 level to show signs of strength again during the Thursday session. This front run the jobs number coming out of America so it will be interesting to see how this plays out. I do think that there is a little bit of resistance just above that could cause some issues, but at the end of the day we are in an uptrend and you could even make a little bit of an argument for a bullish flag or on shorter time frames a falling wedge.

EUR/USD Video 07.05.21

It is obvious that the 1.20 level would catch a lot of attention, and of course the 50 day EMA sitting there makes quite a bit of sense as far as support goes as well. With all of that in mind I think that what we are looking at is the possibility of a move back towards the highs that we made a couple of weeks ago. Ultimately, I think that this remains a short-term “buy on the dip” type of market, but if we were to break down below the 50 day EMA, perhaps after the jobs figure, then we will more than likely go looking towards the 200 day EMA underneath.

Remember, this pair does tend to be very choppy and sideways most of the time so although it is grinding higher, you will probably find more value buying the Euro against other currencies. In the short term though, the US dollar is on its back foot and as long as that continues to be the case in general, that will lift this pair and perhaps send it towards the 1.23 handle.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Mid-Session Technical Analysis for May 6, 2021

The Euro is trading higher against the U.S. Dollar as global risk appetite improved while traders focused on U.S. economic data that may provide clues on when the U.S. Federal Reserve might dial back monetary stimulus. A dip in U.S. Treasury yields also weighed on demand for the U.S. Dollar.

At 12:23 GMT, the EUR/USD is trading 1.2052, up 0.0047 or +0.39%.

In economic news, Euro Zone retail sales rose by more than expected in March, data showed on Thursday, pointing to pent-up consumer demand as pandemic lockdowns ease.

The European Union’s statistics office Eurostat said on Thursday that retail sales in the 19 countries sharing the Euro jumped 2.7% month-on-month in March for a 12.0% year-on-year surge.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1986 will signal a resumption of the downtrend. A move through 1.2150 will change the main trend to up.

The short-term range is 1.2243 to 1.1704. The EUR/USD is currently trading on the strong side of its retracement zone at 1.2038 to 1.1974. This is giving it a slight upside bias. This zone is also new support.

The main range is 1.1603 to 1.2349. Its retracement zone at 1.1976 to 1.1888 is additional support.

The short-term and main retracement zones combine to form a support cluster at 1.1976 to 1.1974.

Another short-term range is 1.1704 to 1.2150. Its 50% level at 1.1927 is another potential support area. This level forms inside the main retracement zone.

The minor range is 1.2150 to 1.1986. Its 50% level at 1.2068 is the first upside target. Since the main trend is down, sellers could come in on a test of this level. They are going to try to form a potentially bearish secondary lower top.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the EUR/USD on Wednesday will be determined by trader reaction to 1.2038 and 1.2068.

Bearish Scenario

A sustained move under 1.2068 will indicate the presence of sellers. This could trigger a break into the minor bottom at 1.1986, followed by 1.1976.

Bullish Scenario

A sustained move over 1.2068 will signal the presence of buyers. This could trigger an acceleration to the upside with 1.2150 the next likely upside target.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Analysis Today Including Key Price and Chart Patterns

The EUR/USD is building a bullish bounce at the 38.2% Fibonacci retracement level, the 1.20 support zone, and the 144 and 233 ema area as expected in our EUR/USD video analysis.

This article will analyse the main targets for this bullish bounce. We will also take a look when to expect the next bearish price swing.

Price Charts and Technical Analysis

EUR/USD 6.5.2021 4 hour chart

The EUR/USD seems to have completed a bearish wave A (grey) at the support zone. This occurred after price action completed 5 waves up (grey) within wave A (pink):

  1. The wave A (grey) is probably part of a larger bearish ABC zigzag (grey).
  2. The ABC (grey) pattern is expected to complete a wave B (pink).
  3. The main target for the wave B (grey) is around the Wizz level 5 at 1.21. Here a bearish bounce is expected (orange arrows).
  4. The main target for the wave C (grey) of wave B (pink) is at the 61.8% Fibonacci retracement level near 1.1875 (blue box). Here a bullish bounce is expected (blue arrow).
  5. Both ABC zigzag patterns (grey and pink) are invalid if price action breaks the top too soon or the bottom.

On the 1 hour chart, we can see that the uptrend finished at the end of last week when price action broke below the 144 ema. Prior to the break, the 144 ema acted as a strong support zone. With the bearish breakout, a bearish retracement sent price action lower.

EUR/USD 1 hour chart 6.5.2021

On the next 1 hour chart, we focus on the recent price swing and Elliott Wave patterns:

  1. A bearish 5 wave (blue) has been completed in the 5 wave pattern (orange).
  2. A falling wedge reversal chart pattern confirmed the end of the bearish price swing.
  3. Also the divergence pattern (purple) indicated exhaustion for the bears.
  4. A bullish breakout above the resistance trend line (dotted orange) and the 21 ema zone confirmed a bullish price swing.
  5. Now the main target seems to be the 144 ema resistance If a bull flag chart pattern emerges, then a new higher high could complete a 5 wave up (blue) within wave A (orange).
  6. A bearish ABC could send price back down again to the support zone (blue box).
  7. An inverted head and shoulders pattern could end the wave B (orange) and start the wave C (orange).
  8. A break below the Wizz 5 level invalidates (red circle) the currently expected bullish ABC pattern.

EUR/USD 6.5.2021 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

For a look at all of today’s economic events, check out our economic calendar.

German Factory Orders Deliver EUR Support Early in the Session

It was a quieter start to the day on the Eurozone economic calendar on Thursday. Key stats included German factory orders.

In March, factory orders rose by 3.0%, month-on-month, following a 1.2% increase in February. Economists had forecast a 1.7% rise.

According to Destatis,

  • Domestic orders increased by 4.9% and foreign orders by 1.6% month-on-month.
  • New orders from the euro area increased 0.7% and by 2.2% from other countries.
  • Manufacturers of intermediate goods saw new orders increase by 2.8%.
  • Consumer goods manufacturers saw new orders jump by 8.5%, with orders for capital goods up 2.5%.
  • When compared with February 2020, which was the month before restrictions were imposed, turnover was 3.4% lower.
  • Compared on the same month a year earlier, new orders were up 27.8%.

Market Impact

Ahead of the numbers the EUR had fallen to a pre-stat and current day low $1.19932.

In response to the numbers, the EUR slipped to a post-stat low $1.20051 before rising to a post-stat and current day high $1.20278.

At the time of writing, the EUR was up by 0.16% to $1.20228.

EURUSD 060521 Hourly Chart

Next Up

Eurozone retail sales figures followed by the weekly jobless claim figures from the U.S. Prelim U.S unit labor cost and nonfarm productivity figures for the 1st quarter are due out but will likely have limited impact on the broader markets.

From the ECB, the Economic Bulletin is also due out shortly…

EUR/USD Daily Forecast – Test Of Resistance At 1.2020

EUR/USD Video 06.05.21.

Euro Tries To Gain More Ground Against U.S. Dollar

EUR/USD is currently trying to get back above the resistance at the 20 EMA at 1.2020 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index did not manage to settle above the resistance at the 20 EMA at 91.30 but stays close to this level. The nearest support level for the U.S. Dollar Index is located at the 91 level. If the U.S. Dollar Index gets to the test of this level, EUR/USD will get more support.

Today, foreign exchange market traders will have a chance to take a look at Euro Area Retail Sales data for March. Analysts expect that Retail Sales increased by 1.5% month-over-month in March after growing by 3% in February. On a year-over-year basis, Retail Sales are projected to increase by 9.6% as Retail Sales were under significant pressure in March 2020.

Meanwhile, the U.S. will release Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims are expected to decline from 553,000 to 540,000 while Continuing Jobless Claims are projected to decrease from 3.66 million to 3.62 million.

Yesterday’s ADP Employment Change report was a bit worse than the analyst consensus but it still highlighted rapid employment growth, and the upcoming employment reports are also expected to show that the situation in the job market continues to improve.

Technical Analysis

eur usd may 6 2021

EUR/USD is testing the resistance at the 20 EMA at 1.2020. In case this test is successful, EUR/USD will move towards the next resistance level at 1.2040.

A move above the resistance at 1.2040 will push EUR/USD towards the next resistance at 1.2060. In case EUR/USD manages to settle above this level, it will head towards the resistance which is located at 1.2090.

On the support side, the nearest support level for EUR/USD is located at the 50 EMA at 1.1990. This support level has been tested several times in recent trading sessions and proved its strength.

In case EUR/USD declines below the support at 1.1990, it will move towards the next support level at 1.1965. A successful test of the support at 1.1965 will push EUR/USD towards the support at 1.1925.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data and Monetary Policy in Focus, with the Bank of England in the Spotlight

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar was in action early this morning.

For the Kiwi Dollar

Building consents were in focus this morning.

In March, building consents jumped by 17.9% following a revised 19.3% slide in February.

According to NZ Stats,

  • A record 41,028 new homes had been consented in the year ended March 2021.
  • In the month of March, a monthly record 4,128 new homes were consented.

The Kiwi Dollar moved from $0.72178 to $0.72169 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.01% to $0.7217.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.11% to ¥109.33 against the U.S Dollar, while the Aussie Dollar was up by 0.01% to $0.7748.

The Day Ahead:

For the EUR

It’s a quieter day ahead on the economic data front. German factory orders and Eurozone retail sales figures will be in focus later today.

While we will expect some EUR sensitivity to the retail sales figures, German factory orders will likely be the key driver.

At the time of writing, the EUR was down by 0.02% to $1.2003.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. Finalized services and composite PMI figures are due out for the UK.

Expect any revisions to the services PMI to influence ahead of the Bank of England monetary policy decision later in the day.

With the markets expecting the BoE to stand pat, any dissent in the ranks and hawkish chatter would give the Pound a boost.

At the time of writing, the Pound was flat at $1.3905.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. Unit labor costs and nonfarm productivity figures for the 1st quarter are in focus later today along with jobless claims figures.

Expect the weekly jobless claims figures to be the key driver. The markets will be looking for a fall to sub-500k levels ahead of tomorrow’s NFP numbers.

At the time of writing, the Dollar Spot Index was up by 0.01% to 91.316.

For the Loonie

It’s another quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction. The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.01% to C$1.2268 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

May 6th 2021: DXY Enters Quiet Phase Above 91.00 as Traders Await US Job’s Data on Friday

Charts: Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following a three-month retracement, demand at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close.

April upside throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price also breached trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Technical structure unchanged from previous analysis.

Thanks to Wednesday’s bearish presence heading into the European close, the 200-day simple moving average is now within touching distance, currently circling 1.1940 levels. This—as aired in recent technical writing—represents a dynamic value that could deliver support if tested. To the upside, however, Quasimodo resistance stands at 1.2169.

In terms of trend, despite the 2021 retracement, the currency pair has been entrenched within an uptrend since early 2020, movement that many traders will likely refer to as a primary trend on this timeframe.

The RSI recently placed support at 51.36 in the mix, following a retreat south of the overbought setting in late April.

H4 timeframe:

Wednesday’s decline, as evident from the H4 scale, had EUR/USD shake hands with support at 1.1990 and a Fibonacci cluster between 1.1971 and 1.1986 (a defined area on a price chart where Fib retracement levels converge). For the moment, buyers have welcomed the area, yet to add bullish conviction traders are likely watching for either a break of yesterday’s high at 1.2026 or a bullish candlestick configuration to form.

As highlighted in Wednesday’s technical briefing, overthrowing the aforesaid Fib cluster unearths additional support at 1.1937 (aligns closely with the 200-day simple moving average on the daily scale), while a decisive rotation to the upside shines light on resistance at 1.2108.

H1 timeframe:

For those who read Wednesday’s technical briefing, you may recall the following (italics):

From the H4 timeframe, however, focus is on support at 1.1971/1.1990 (support/Fibonacci cluster). This also unlocks a possible whipsaw through 1.20 on the H1 to test the noted H4 support as well as H1 support at 1.1989. A H1 close back above 1.20—following a 1.1971/1.1990 test—is likely to be interpreted as a bullish theme, targeting at least 1.2035 (H1) resistance.

As evident from the H1 chart, 1.20 did indeed embrace a mild whipsaw on Wednesday, allowing support to 1.1989 to enter the fray. However, upside attempts have been somewhat lacklustre thus far, unable to pencil in a fresh higher high and reach H1 resistance at 1.2035.

Action out of the RSI indicator reveals the value has struggled to overturn 47.50 resistance, parked just south of the 50.00 centreline. However, readers may also be aware that 47.50 rejections have become softer in recent trade, echoing a possible break in the not-to-distant future.

Observed levels:

Recovery from the key figure 1.20 on the H1 could still grace the chart, reinforced by the H4 crossing swords with support at 1.1971/1.1990 (support/Fibonacci cluster) and the monthly scale showing buyers rebounding from demand at 1.1857-1.1352.

Another dip-buying scenario to be mindful of is a move to H4 support at 1.1937, a level sharing chart space with the 200-day simple moving average from 1.1940 (daily timeframe).

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082. Should a bearish scenario unfold, demand at 0.7029-0.6664 (prior supply) is featured to the downside.

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Technical structure unchanged from previous analysis.

From mid-April, AUD/USD has been consolidating around resistance from 0.7817.

Territory to the downside shines the technical spotlight on February’s low at 0.7563, followed closely by trendline resistance-turned support, extended from the high 0.8007, and the 200-day simple moving average at 0.7466.

Rupturing 0.7817, nevertheless, unbolts the door for an approach to supply at 0.8045-0.7985.

Interestingly, the RSI value recently tested trendline support-turned resistance, extended from the low 36.55, though has so far been unable to influence a bearish presence south of the 50.00 centreline. Therefore, traders are urged to pencil in the possibility of a move north to test trendline resistance, drawn from the high 80.12.

H4 timeframe:

Elevated on the back of risk flow—note strong gains witnessed in European equity indexes—the Australian dollar eked out modest gains versus the greenback on Wednesday.

Erasing the majority of Tuesday’s losses, yesterday’s gains lifted price action out of 0.7696-0.7715 demand (this area experienced a whipsaw on Tuesday) and clocked a session peak at 0.7755.

AUD/USD bulls are likely eyeballing Monday’s tops at 0.7766, followed by Quasimodo resistance at 0.7800.

Also of technical relevance is the currency pair has been busy carving out a consolidation between the 0.7800 Quasimodo resistance and the aforesaid demand area since April 20th.

H1 timeframe:

US trade, in spite of efforts to hold beneath the 100-period simple moving average around 0.7737, dethroned the said SMA and crossed paths with resistance at 0.7752.

Territory north of 0.7752 throws light on a Fibonacci cluster between 0.7767 and 0.7760, closely shadowed by Quasimodo resistance at 0.7777.

Interestingly, RSI movement scaled above the 50.00 centreline and clocked tops just south of overbought status, which guided a test of a neighbouring trendline support, extended from the low 24.48.

Observed levels:

Follow-through upside, according to the H4 chart, is a possibility, at least until reaching Monday’s tops at 0.7766. Despite this, short-term buyers face H1 resistance at 0.7752, together with a Fibonacci cluster between 0.7767 and 0.7760 (which houses Monday’s peak at 0.7766).

Longer term, daily eyes likely remain on resistance from 0.7817, consequently drawing attention to the 0.78 figure based on the H1 scale and Quasimodo resistance from 0.7800 on the H4.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, the pair is attempting to hold the breached descending resistance, echoing potential support.

Daily timeframe:

Technical structure unchanged from previous analysis.

Despite the monthly timeframe chalking up possible supportive structure, the daily timeframe has price engaging supply at 109.97-109.18.

Trendline support, extended from the low 102.59, serves as a downside target south of current supply; a bullish showing, on the other hand, casts light towards longer-term supply at 110.94-110.29, stationed under another supply at 111.73-111.19.

Trend studies show the unit has been trending higher since the beginning of 2021.

The RSI indicator, although ending last week above the 50.00 centreline (a sign of trend strength), is seen testing resistance at 57.00.

H4 timeframe:

Technical structure unchanged from previous analysis.

61.8% Fib resistance at 109.60—located under supply at 109.97-109.72 (an area positioned within the upper range of daily supply at 109.97-109.18)—remain primary areas on the H4 scale, with support at 108.99 serving as a floor for the time being.

External areas to be aware of are support at 108.50 and neighbouring demand from 108.20-108.43, in addition to supply posted at 110.85-110.46 (fixed within daily supply at 110.94-110.29).

H1 timeframe:

It was another relatively quiet session on Wednesday, with buyers and sellers going toe to toe between the 100-period simple moving average (now circling 109.21) and supply from 109.52-109.39 (a decision point to break the 109.26 low). Despite this, we see sellers attempting to overthrow the aforesaid moving average, as we write.

Below the moving average, 109 stands in sight, joined by trendline support, drawn from the low 107.47. Below 109, however, unmasks demand at 108.57-108.46.

Above current supply, aside from tops around Monday’s peak at 109.69, we can see resistance calling at 109.95, alongside the 110 figure.

Observed levels:

The 109 figure on the H1, aligning with H1 trendline support, is an area short-term buyers may take aim at today, particularly as the 100-period simple moving average is on the verge of giving way. What’s also technically appealing around 109 is H4 support plotted at 108.99.

Technicians are also likely to note monthly currently testing descending resistance-turned support.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. Contained within February’s range, however, March and April witnessed decreased volatility.

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Technical structure unchanged from previous analysis.

Resistance at 1.4003 has proved a stubborn hurdle since March, capping upside attempts on multiple occasions. Any downside from this base throws light on 1.3670 bottoms, arranged north of Quasimodo support at 1.3609.

Should buyers regain consciousness and brush aside current resistance, Quasimodo resistance at 1.4250 could enter the frame.

From the RSI indicator, the value recently dropped from 58.20 peaks and crossed swords with trendline support, pencilled in from the low 36.14. As you can see, the aforementioned trendline is holding for the time being.

As for trend, GBP/USD has been trending higher since early 2020, despite the two-month retracement.

H4 timeframe:

Technical structure unchanged from previous analysis.

Resistance at 1.3919 continues to reject upside movement, following Monday’s one-sided advance from demand at 1.3809-1.3832.

Upstream—north of 1.3919— brings light to tops around 1.3976, followed by Quasimodo resistance at 1.4007. Below the aforesaid demand brings attention to Quasimodo support at 1.3750, which happens to align with a 1.272% Fib projection at 1.3746 and a 78.6% Fib level at 1.3739 (Fib cluster).

H1 timeframe:

Sellers failed to step in from the 1.39 figure and 100-period simple moving average on Wednesday, highlighting nearby resistance at 1.3929.

As shown on the H1 chart, 1.39 represents support at the moment, aided by the aforesaid moving average. Defending 1.39 as support and taking on 1.3929 resistance potentially sets the technical stage for a run to tops noted on the H4 scale at 1.3976, as well as the 1.40 figure (housed between H1 Fibonacci resistance at 1.4013-1.3988).

Observed levels:

The combination of the 1.39 figure on the H1 and the 100-period simple moving average is a zone possibly on the radar today for short-term buyers. Breaking H1 resistance at 1.3929 could add bullish weight as this would also secure a bullish presence north of H4 resistance from 1.3919.

Longer term, technical eyes are perhaps drawn to daily resistance at 1.4003, which blends closely with the key figure 1.40 on the H1 and Quasimodo resistance on the H4 at 1.4007.

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EUR/USD Price Forecast – Euro Sits on The 50 Day EMA

The Euro has gone back and forth during the course of the trading session on Wednesday as we continue to flirt with the 1.20 handle. This is a market that obviously will be very noisy in general, as we are waiting to see the jobs number on Friday determine the next risk appetite situation appears. In that scenario, and the fact that the 50 day EMA sits just below I think that we are probably going to kill time over the next couple of days, simply grinding back and forth instead of making any major move. This being the case, I would anticipate that this market is going to be very boring over the next couple of days.

EUR/USD Video 06.05.21

That being said, if we were to break down below the 50 day EMA then it is likely that we go chasing the 200 day EMA underneath, which of course attracts a lot of attention. Ultimately, the market is going to continue to be very choppy overall, and I do think that what we are looking at is a market that is probably a short range bound trading type of opportunity if that. On the other hand, if we break above the 1.2050 level, then it is possible that the market could go looking towards the 1.2050 level above.

All things being equal, I do not really have any interest in this area, so am waiting to see whether we get some type of momentum that we can follow. If we do not, then I will simply stand on the sidelines as this pair does tend to be very choppy in general.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Mid-Session Technical Analysis for May 5, 2021

The Euro is trading nearly flat against the U.S. Dollar on Wednesday after recovering from early session weakness. The single-currency is being supported as Euro Zone bond yields edged up as equity markets recovered from a sudden slump a day earlier that had sent yields on the safe-haven assets falling sharply.

At 11:22 GMT, the EUR/USD is trading 1.2014, down 0.0001 or -0.01%.

In other news, Euro Zone producer prices accelerated in line with expectations in March, driven by increases for energy and intermediate goods, data showed on Wednesday, reinforcing forecasts of higher consumer inflation in the coming months.

Later today traders will get the opportunity to react to several U.S. economic reports including April’s ADP Employment Change at 12:30 GMT, the final Markit purchasing managers’ index (PMI) at 13:45 GMT and the ISM Non-Manufacturing PMI at 14:00 GMT.

The results generated by these reports should set the tone later in the session. Stronger-than-expected data could drive yields higher which would make the U.S. Dollar a more attractive investment.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier in the session when sellers took out 1.1994. The next target is the main bottom at 1.1943. A move through 1.2150 will change the main trend to up.

The intermediate range is 1.2243 to 1.1704. The EUR/USD is currently trading inside its retracement zone at 1.1974 to 1.2038.

The main range is 1.1603 to 1.2349. Its retracement zone at 1.1976 to 1.1888 is the key support area. This zone is controlling the near-term direction of the EUR/USD.

The short-term range is 1.1704 to 1.2150. Its 50% level at 1.1927 is another potential downside target. It falls inside the main retracement zone.

A price cluster at 1.1976 to 1.1974 is also potential support.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to 1.2015.

Bearish Scenario

A sustained move under 1.2015 will indicate the presence of sellers. The first downside target is the intraday low at 1.1986, followed by the support cluster at 1.1976 to 1.1974. Aggressive counter-trend buyers could come in on a test of this area.

If 1.1974 fails then look for the selling to possibly extend into the main bottom at 1.1943 and the pivot at 1.1927.

Bullish Scenario

A sustained move over 1.2015 will signal the presence of buyers. The first upside target is 1.2038. Look for sellers on the first test.

Taking out 1.2038 could trigger a surge into a minor pivot at 1.2068.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD, GBP/USD Analysis & Setups 5 – 7 May 2021

The EUR/USD is completing a bearish wave 5 in a larger wave A of an ABC zigzag pattern. A bullish ABC bounce in wave B is expected around 1.975-1.20 support zone. The GBP/USD remains choppy and needs a clear breakout first.

If you think our videos, analysis, and education can help you become a better trader, then you can ask your own questions via our form and we will answer them in the weekly live webinar every Tuesday.

EUR/USD & GBP/USD Overview

The EUR/USD bullish bounce could indicate an ABC pattern in wave B towards 1.21 before another bearish swing down aims at the 61.8% Fibonacci level around 1.1875.

The GBP/USD bullish breakout could confirm a wave C of wave B. But eventually a bearish price swing is expected to take price action lower towards the 144 ema on the daily chart.

Check out the video below for the full analysis and trade plans on 5 – 7 May 2021:

EUR/USD, GBP/USD technical analysis: patterns, trends, key S&R levels

  • Explanation of potential trade ideas both up and down
  • Beginner friendly, explaining concepts in more detail

EUR/USD & GBP/USD Video

For a look at all of today’s economic events, check out our economic calendar.

Good trading,

Chris Svorcik
CTA

 

April Service PMIs Fail to Deliver a EUR Bounce Back

It was a particularly busy day on the economic calendar. Service sector PMI figures for Italy and Spain were in focus early in the session.

Finalized services and composite PMIs from France, Germany, and the Eurozone also drew attention.

Member State PMIs

In April, Spain’s services PMI rose from 48.1 to 54.6, while Italy’s services PMI slipped from 48.6 to 47.3.

Economists had forecast PMIs of 50.0 and 49.8 respectively.

From France, the services PMI rose from 47.9 to 50.3, which was down from a prelim 50.4.

Germany’s services PMI fell from 50.8 to 49.9, which was down from a prelim 50.1.

The Eurozone

For the Eurozone, the Services PMI rose from 49.6 to 50.5, which was up from a prelim 50.3. As a result, the composite PMI increased from 53.2 to 53.8, which was up from a prelim 53.7.

According to the finalized Markit Composite Survey,

  • The latest data from the private sector indicated the fastest expansion since July and the second best in over two-and-a-half years.
  • Goods producers continued to lead the way, with output rising at a rate little changed from March’s record.
  • Service sector output returned to growth following 7-months of continuous contraction.
  • Germany led the way again in terms of overall growth, supported by strong manufacturing sector growth.
  • A jump in service sector activity in Spain saw private sector growth at its strongest in over 2-years.
  • Growth in both France and Italy was modest in April, while growth in France was at its best in the past 8-months.

The Details

  • New orders across the private sector rose at the most marked pace in over two-and-a-half years.
  • Firms reported higher sales in both domestic and international markets.
  • The rate of backlog growth was the sharpest for 39-months and supported a pickup in hiring.
  • Firms increased staffing levels to the strongest degree for 2-years.
  • Optimism across the private sector reached its highest since composite data were first available in mid-2012.

Market Impact

Through the release of the PMI figures, the EUR fell to a low and a current day low $1.19860 before rising to a high $1.19981.

The upside was short-lived, however, with the EUR easing back.

At the time of writing, the EUR was down by 0.17% to $1.19941.

EURUSD 050521 Hourly Chart

Next Up

April ISM Non-Manufacturing PMI and finalized Markit Services and Composite PMI numbers from the U.S are due out. Ahead of the private sector numbers, ADP nonfarm employment change figures will also influence.

Italy’s Debt: ECB Creates Room for Budget Expansion but Fiscal Space Still has Limits – Interview

An interview with Giacomo Barisone, head of sovereign and public sector ratings at Scope Ratings, about Italy’s sovereign debt dynamics.

Italy (rated BBB+/Negative Outlook by Scope) needs the public investment and structural economic reforms proposed by Draghi to increase near- and long-term growth, but the part financed by national resources comes at cost of wider budget deficits. Can Italy easily take on this new debt?

According to the government’s current debt projections, public debt increases to around 160% of GDP this year from 156% in 2020 before declining, under a constructive scenario to 135.5% of GDP by 2032, near the 134.6% level of 2019. We consider this government scenario optimistic – and instead expect Italy’s debt ratio to remain on a structurally increasing trajectory longer term.

However, the goalposts for interpreting public debt sustainability are shifting. A general government debt ratio of 160% or 180% of GDP in the euro area does mean something different today from what it might have 10 years ago. In 2010, such a debt ratio would surely have resulted in lost market confidence and materially exacerbated Italy’s debt crisis. What has changed are the actions of the European Central Bank, anchoring ultra-low sovereign borrowing rates today, and doing so with scale and flexibility.

Has this monetary-policy shift benefitted countries such as Italy especially?

Yes, it has – the innovation during this crisis has been the flexibility of ECB purchases across jurisdictions, time and asset classes. The central bank has stabilised especially financing conditions of member states with greater propensity for market stress such as Italy by not strictly purchasing assets proportionally to a country’s population & economic size during this crisis. In the process, nearly 30% of Italian general government debt has shifted to the joint Eurosystem balance sheet. As sovereign ratings are assigned on debt due to be paid to the private sector, shifting debt to the official sector balance sheet is credit positive, curtailing the outstanding segment of rated debt owned by the private sector.

The ECB programmes have also given an extended window of opportunity for Italy as well as other sovereign borrowers to improve their debt profile. In addition to changes in the ownership of Italy’s sovereign debt, the weighted average interest cost of outstanding debt has declined to 2% this year from 4% in 2012. We anticipate further declines with Italy refinancing its maturing debt at 10-year BTP rates of (only) 0.9%. The average life of Italian debt has also increased to seven years due to the actions of the Italian Treasury, taking advantage of the flatter yield curve. This supports greater resilience against a higher stock of debt.

So, given ECB support and still favourable rates conditions, how much fiscal space does Italy have?

Even with greater tolerance for increased debt given ECB intervention, Italy’s fiscal space in 2021 still has bounds. True, it is the accommodative monetary policy that is creating fiscal space, and the ECB – as a credible, reserve-currency central bank – does have flexibility with its balance sheet to create further fiscal space for euro area member countries. Yet the ECB’s room for manoeuvre is not without its own checks and balances. The central bank has an inflation mandate, and overly assertive action could result in higher inflation. The central bank’s actions also exacerbate pre-existing financial-system imbalances and could bring more substantive depreciation of the euro especially after this crisis if such balance-sheet expansion were pursued asymmetrically rather than in aggregate during crisis across all major central banks.

Such depreciation would undermine the euro’s growing global reserve-currency status. As the ECB plans exit strategies from the crisis – scaling back pandemic programmes – it is unclear how conventional QE via the Public Sector Purchase Programme, with associated issuer and issue limits, may constrain monetary space after the crisis, or whether such self-imposed QE limits may be further adjusted. There are also legal constraints on the ECB – and thus on the sovereigns relying on the ECB to extend fiscal space.

As Italy does not have an independent monetary policy, any Italy-specific crisis, such as one akin to the 2018 crisis, may not necessarily result in the same scale of ECB intervention as we are currently seeing when all euro area countries face an aggregate shock.

How does Scope weigh up the need for Draghi to kick start the economy with these concerns?

The 25pp increase in Italy’s debt-to-GDP ratio since the start of the crisis is a key credit concern. At the same time, there is no public debt level that by itself implies a lowering in the rating from the current BBB+ investment-grade assignment. Changes in ECB policy and progress toward closer European fiscal union, via ECB policies as well as via forthcoming EU joint-debt issuance, have offset to an extent pressure on the ratings. Nevertheless, Italy’s fiscal space has limits and a higher debt stock increases the sovereign’s vulnerabilities after this crisis is over under conditions of any market reappraisal of sovereign risk or withdrawal of monetary accommodation in the future. The Draghi government should keep fiscal sustainability in mind even as it rightly makes growth-enhancing policies the main priority.

Despite the ECB and EU support, what are the longer-term risks to Italy’s ratings?

Risks to Italy’s longer-term credit outlook are several. They include: (i) lower long-run output due to prolongation of lockdowns and permanent structural damage to economic potential stemming from Covid-19 impairment; (ii) implementation risks surrounding recovery funds and pro-growth structural reform, in recognising Italy’s record of low absorption rates of EU funds and recurrent changes in government interrupting reform momentum; and (iii) the risk of crystallisation of high contingent liabilities on the country’s balance sheet from stress in the private sector.

Italy has sharply increased public guarantee schemes amounting to 13% of GDP, which have been extended until end-2021. If the private sector were to require further extraordinary support in the form of bailout monies, this could push up public debt beyond existing expectations, which could result in downward pressure on ratings.

For a look at all of today’s economic events, check out our economic calendar.

Giacomo Barisone is Managing Director of Sovereign and Public Sector ratings at Scope Ratings GmbH. Dennis Shen, Director at Scope, contributed to writing this interview.

EUR/USD Daily Forecast – Test Of Support At 1.1990

EUR/USD Video 05.05.21.

Euro Is Under Pressure

EUR/USD is currently testing the support at 1.1990 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get above the 20 EMA at 91.35 and is moving towards the 50 EMA at 91.50. In case the U.S. Dollar Index manages to settle above the 50 EMA, EUR/USD will find itself under more pressure.

Today, foreign exchange market traders will have a chance to take a look at the final readings of Services PMI reports from EU and U.S. Euro Area Services PMI is projected to increase from 49.6 in March to 50.3 in April. Numbers above 50 show expansion, so Euro Area services segment is expected to return to growth. In the U.S., Services PMI is projected to grow from 60.4 to 63.1.

U.S. ADP Employment Change report may also have an impact on the dynamics of the U.S. dollar. Analysts expect that the report will indicate that U.S. businesses hired 800,000 workers in April.

Technical Analysis

eur usd may 5 2021

EUR/USD managed to settle below the support at the 20 EMA at 1.2020 and is testing the next support level which is located near the 50 EMA at 1.1990. RSI remains in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

If EUR/USD settles below the 50 EMA, it will head towards the next support level which is located at 1.1965. A successful test of the support at 1.1965 will push EUR/USD towards the next support at 1.1925. In case EUR/USD declines below this level, it will move towards the support at 1.1900.

On the upside, the previous support at the 20 EMA at 1.2020 will serve as the first resistance level for EUR/USD. If EUR/USD settles above this level, it will head towards the next resistance at 1.2040. A move above the resistance at 1.2040 will open the way to the test of the next resistance level which is located at 1.2060.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Rooftop Pattern Shows Either a Breakout or a Drop from POC

The EURUSD has formed a rooftop pattern and we could see a move to the downside. At this point we should be focused on selling the rallies.

The POC zone comes between 1.2060-1.2080. The rooftop pattern base is 1.1990. If the market makes a close below 1.1990 we could expect a downside continuational move towards 1.1953 and 1.1893. The market is bearish now and in my opinion it is either a breakout or a rejection from the POC zone.

For a look at all of today’s economic events, check out our economic calendar.

Cheers and safe trading,

Nenad

 

Economic Data Puts the EUR, Pound, and Dollar in the Spotlight

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar this morning. The Kiwi Dollar and the Aussie Dollar were in action early this morning.

For the Kiwi Dollar

Employment figures were in focus this morning.

In the 1st quarter, employment increased by 0.6%, following a 0.6% rise in the 4th quarter of last year. Economists had forecast a 0.2% rise.

According to NZ Stats,

  • The unemployment rate fell from 4.9% to 4.7% in the March quarter, easing further back from a Q3 peak of 5.2%.
  • While easing back, however, the unemployment remained high compared with recent years.
  • The underutilization rate increased by 0.4 percentage points to 12.2% quarter-on-quarter. Year-on-year, the underutilization rate was up by 1.8 percentage points.
  • Quarter-on-quarter, the employment rate increased from 66.8% to 67.1%, while down by 67.7% from the March quarter of 2020.

The Kiwi Dollar moved from $0.71500 to $0.71701 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.41% to $0.7174.

For the Aussie Dollar

Building approvals were in focus this morning.

In March, building approvals rose by 17.4% following a 21.6% jump in February. Economists had forecast a more modest 3.0% rise.

The Aussie Dollar moved from $0.77254 to $0.77304 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.38% to $0.7736.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.06% to ¥109.26 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic data front. Service sector PMIs for Italy and Spain are due out along with finalized PMIs for France, Germany, and the Eurozone.

Barring marked revisions to prelim figures, Italy’s services PMI and the Eurozone’s Composite PMI will likely have the greatest impact.

The devil will be in the details, with employment, new orders, and sector optimism likely to be material takeaways from the surveys.

At the time of writing, the EUR was up by 0.09% to $1.2025.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats for the markets to consider ahead of the Bank of England monetary policy decision tomorrow.

The lack of stats will leave the Pound in the hands of market risk sentiment on the day.

At the time of writing, the Pound was up by 0.18% to $1.3912.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. The market’s favored ISM Non-Manufacturing PMI is due out along with finalized Markit services and composite PMI numbers.

Ahead of the private sector PMIs, ADP nonfarm employment change figures are also due out.

Expect the ADP nonfarm employment change and Non-Manufacturing PMIs to have the greatest impact on the day.

At the time of writing, the Dollar Spot Index was down by 0.12% to 91.177.

For the Loonie

It’s a quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction. The lack of stats will leave the Loonie in the hands of crude oil inventory numbers and market risk sentiment on the day.

At the time of writing, the Loonie was up by 0.18% to C$1.2287 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

May 5th 2021: Soured Risk Appetite Elevates Safe-Haven USD Demand; Euro Tests $1.20

Charts: Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following a three-month retracement, demand at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close.

April upside throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price also breached trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Largely unchanged from previous analysis.

The 200-day simple moving average remains flirting around 1.1939 levels, a dynamic value that could deliver support if tested. Quasimodo resistance at 1.2169, on the other hand, commands attention to the upside.

Despite the 2021 retracement, trend studies reveal the currency pair has been entrenched within an uptrend since early 2020, movement that many traders will likely refer to as a primary trend on this timeframe.

In terms of RSI action, last week’s withdrawal from 69.00 positions the value within shouting distance of support at 51.36.

H4 timeframe:

Technical structure unchanged from previous analysis.

The Dollar index (ticker: DXY) firmed Tuesday, unwinding a portion of April’s 2 percent decline amid fading risk appetite.

As you can see, this pressured Europe’s single currency to fresh weekly troughs at 1.1998, and consequently tipped the scales in favour of a move to support at 1.1990 and a Fibonacci cluster between 1.1971 and 1.1986 (a defined area on a price chart where Fib retracement levels converge).

Overthrowing the aforesaid Fib cluster unearths additional support at 1.1937 (aligns closely with the 200-day simple moving average on the daily scale), while a rotation to the upside shines light on resistance at 1.2108.

H1 timeframe:

Tuesday’s bearish phase watched the 1.20 figure make an appearance, action that clearly stirred short-term bullish interest mid-way through London hours. Technically interesting here is the support level residing beneath 1.20 at 1.1989, a prior Quasimodo resistance.

RSI movement on the H1 pencilled in bullish divergence yesterday, as price shook hands with 1.20. Subsequent action witnessed the RSI value exit oversold waters to test space just south of the 50.00 centreline.

Observed levels:

Partly modified from previous analysis.

April showing life out of monthly demand from 1.1857-1.1352 reinforces a possible retest (dip-buying scenario) at the 200-day simple moving average from 1.1939 (daily timeframe).

From the H4 timeframe, however, focus is on support at 1.1971/1.1990 (support/Fibonacci cluster). This also unlocks a possible whipsaw through 1.20 on the H1 to test the noted H4 support as well as H1 support at 1.1989. A H1 close back above 1.20—following a 1.1971/1.1990 test—is likely to be interpreted a bullish theme, targeting at least 1.2035 (H1) resistance.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082. Should a bearish scenario unfold, demand at 0.7029-0.6664 (prior supply) is featured to the downside.

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Technical structure unchanged from previous analysis.

From mid-April, AUD/USD has been consolidating around resistance from 0.7817.

Territory to the downside shines the technical spotlight on February’s low at 0.7563, followed closely by trendline resistance-turned support, extended from the high 0.8007.

Rupturing 0.7817, nevertheless, unbolts the door for an approach to supply at 0.8045-0.7985.

Interestingly, the RSI value is seen testing trendline support-turned resistance, extended from the low 36.55, and recently nudged south of the 50.00 centreline. North of here, traders are urged to pencil in trendline resistance, drawn from the high 80.12.

H4 timeframe:

A bearish phase unfolded on Tuesday, largely driven on the back of a USD bid amidst safe-haven demand.

Technically, this had price action whipsaw through the walls of 0.7696-0.7715 demand (and trendline support, taken from the low 0.7531), movement which missed a Fibonacci cluster between 0.7657 and 0.7672 by a whisker (green).

Upside targets to be mindful of on the H4 scale are Monday’s tops at 0.7766, followed by Quasimodo resistance at 0.7800.

H1 timeframe:

Early US hours delivered a vigorous whipsaw through 0.77 bids on Tuesday, with enough force to trip protective stops and fill breakout sellers’ sell stops to cause a bear trap. Traders will note that price snapping through 0.77 not only came within striking distance of support at 0.7668, the move was accompanied by RSI bullish divergence and a near-test of RSI support at 19.40 (the value now hovers nearby the underside of the 50.00 centreline).

The absence of supply north of 0.77 unlocks a possible bid today, taking aim at resistance from 0.7752 and the 100-period simple moving average.

Observed levels:

The 0.77 whipsaw on the H1—together with H4 crossing swords with trendline support and coming within a whisker of testing Fibonacci support at 0.7657/0.7672—underlines a potential bullish scenario above 0.77, targeting at least H1 resistance from 0.7752.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, the pair is attempting to hold the breached descending resistance, echoing potential support.

Daily timeframe:

Technical structure unchanged from previous analysis.

Despite the monthly timeframe chalking up possible supportive structure, the daily timeframe has price engaging supply at 109.97-109.18.

Trendline support, extended from the low 102.59, serves as a downside target south of current supply; a bullish showing, on the other hand, casts light towards longer-term supply at 110.94-110.29, stationed under another supply at 111.73-111.19.

Trend studies show the unit has been trending higher since the beginning of 2021.

The RSI indicator, although ending last week above the 50.00 centreline (a sign of trend strength), is seen testing resistance at 57.00.

H4 timeframe:

61.8% Fib resistance at 109.60—located under supply at 109.97-109.72 (an area positioned within the upper range of daily supply at 109.97-109.18)—remain primary areas on the H4 scale, with support at 108.99 serving as a floor for the time being.

External areas to be aware of are support at 108.50 and neighbouring demand from 108.20-108.43, in addition to supply posted at 110.85-110.46 (fixed within daily supply at 110.94-110.29).

H1 timeframe:

Monday’s 109 test—aided by the 100-period simple moving average—elevated the currency pair higher on Tuesday, consequently crossing paths with supply at 109.52-109.39 (a decision point to break the 109.26 low) and intersecting trendline support-turned resistance, taken from the low 107.64.

The 109.52-109.39 test, as you can see, pressured short-term flow to the 100-period simple moving average, which replied with a bullish wave back to the aforesaid supply.

Above current supply, aside from tops around Monday’s peak at 109.69, we can see resistance calling at 109.95, alongside the 110 figure. Below 109, however, trendline support, drawn from the low 107.47, is seen close by, with subsequent selling unmasking demand at 108.57-108.46.

Observed levels:

Short-term range traders will likely be drawn to the H1 scale today, as price fluctuates between supply at 109.52-109.39 and the 109 base (along with the 100-period simple moving average). Technicians may also note the 109 figure aligns closely with H4 support at 108.99.

Range traders, however, are urged to pencil in the possibility of whipsaws forming. Directly above H1 supply we have the H4 timeframe’s 61.8% Fib resistance at 109.60, while south of 109 has H1 trendline support ready to accept any fakeout movement.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. Contained within February’s range, however, March and April witnessed decreased volatility.

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Technical structure unchanged from previous analysis.

Resistance at 1.4003 has proved a stubborn hurdle since March, capping upside attempts on multiple occasions. Any downside from this base throws light on 1.3670 bottoms, arranged north of Quasimodo support at 1.3609.

Should buyers regain consciousness and brush aside current resistance, Quasimodo resistance at 1.4250 could enter the frame.

From the RSI indicator, the value dropped from 58.20 peaks and crossed swords with trendline support, pencilled in from the low 36.14.

As for trend, GBP/USD has been trending higher since early 2020, despite the two-month retracement.

H4 timeframe:

1.3809-1.3832 demand, as you can see, survived Friday’s mild breach, with GBP/USD bulls entering an offensive phase and shaking hands with resistance at 1.3919 on Monday. As evident from the chart, the aforementioned resistance held firm and supported a bearish response on Tuesday.

Below the aforesaid demand brings notice to Quasimodo support at 1.3750, which happens to align with a 1.272% Fib projection at 1.3746 and a 78.6% Fib level at 1.3739 (Fib cluster).

Above 1.3919, nonetheless, brings light to tops around 1.3976, followed by Quasimodo resistance at 1.4007.

H1 timeframe:

Monday embracing resistance at 1.3929 stirred bearish flow, with early hours Tuesday pushing below the 1.39 figure and 100-period simple moving average.

As you can see, Tuesday had price knock on the door of lows at 1.3838 in early US and stage a recovery back to within touching distance of 1.39. A bearish rejection forming from the latter today, with enough force to dethrone Tuesday’s low, throws light on a possible test of 1.38 (a level mingling with a 61.8% Fib level and a 100% Fib projection at 1.3789).

RSI flow has the value attempting to find acceptance north of the 50.00 centreline, following earlier lows at 37.40.

Observed levels:

The combination of the 1.39 figure on the H1 and the 100-period simple moving average is a zone possibly on the radar today. A stab at lower prices from the aforesaid resistances is likely to zero in on H4 demand from 1.3809-1.3832, an area shadowed by the 1.38 figure on the H1.

1.39 shorts, however, must take into account H4 resistance at 1.3919 and H1 resistance from 1.3929, as these levels could pull price higher to collect more sellers (and trip 1.39 stops) before driving lower.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

EUR/USD Mid-Session Technical Analysis for May 4, 2021

The Euro is trading lower on Tuesday as a drop in demand for higher risk assets following a sell-off in the U.S. stock market encouraged investors to seek protection in the U.S. Dollar. The dollar’s rise against the Euro could also be a reflection of profit-taking and position-squaring ahead of upcoming U.S. economic reports and policy speeches by Federal Reserve members.

At 18:51 GMT, the EUR/USD is trading 1.2016, down 0.0047 or -0.39%.

Tuesday’s rebound reversed losses sustained on Monday after a disappointing U.S. manufacturing survey report. Although April’s headline survey numbers were lower than March, the U.S. recovery remained firmly on track with price pressures rising, while the Federal Reserve appeared to be in no hurry to tighten.

Traders also feel that if Friday’s U.S. Non-Farm Payrolls report blows away the estimates then the Fed is going to have to start talking seriously about tapering sooner rather than later.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1994 will reaffirm the downtrend. The main trend will change to up on a move through 1.2150.

The intermediate range is 1.2243 to 1.1704. The EUR/USD is currently trading inside its retracement zone at 1.1974 to 1.2038.

The main range is 1.1603 to 1.2349. Its retracement zone at 1.1976 to 1.1888 is the primary downside target. This area is also controlling the near-term direction of the Forex pair.

The short-term range is 1.1704 to 1.2150. Its 50% level at 1.1927 is a potential downside target. It falls inside the main retracement zone.

Short-Term Outlook

Trader reaction to 1.2038 will set the tone into the close.

Bearish Scenario

A sustained move under 1.2038 will indicate late session selling pressure. This could drive the EUR/USD through the 1.1994 main bottom and into the main 50% level at 1.1976.

Bullish Scenario

A sustained move over 1.2038 will signal the presence of buyers. This could trigger a late session short-covering rally into 1.2075.

https://www.fxempire.com/currencies/eur-usd

EUR/USD Price Forecast – Euro Reaches Towards Big Figure

The Euro fell significantly during the course of the trading session on Tuesday to reach towards the 1.20 handle, an area that of course will attract a certain amount of attention due to the fact that the large figure attracts money flow, and of course we also have the 50 day EMA sitting just below there so I think that is yet another reason to believe that the structure could attract a certain amount of attention. Furthermore, we have seen a significant amount of resistance in that general vicinity.

EUR/USD Video 05.05.21

Ultimately, I do believe that we go looking to test the highs again, but we could see a lot of noise in the short term to get there. On the other hand, if we were to break down below the 50 day EMA, then the market is likely to go looking towards the 200 day EMA underneath, which is sitting at roughly 1.1850 level. All things being equal, the market is going to continue being noisy, but I still believe that it favors the overall uptrend.

With all of that in mind I believe that it is only a matter of time before we see some type of catalyst, perhaps the jobs number on Friday will be that catalyst. I know that estimates are all over the place, so it has a high likelihood of causing a lot of noise in general. The US dollar is on its back foot, but if there is a sudden rush to safety, we could then see a breakthrough to the downside. So far though, it does not look like we are quite ready to do that.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Daily Forecast – Euro Is Under Strong Pressure Against U.S. Dollar 

EUR/USD Video 04.05.21.

U.S. Dollar Gains Ground Against Euro

EUR/USD is currently testing the support at the 20 EMA at 1.2025 while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index has settled back above the 91 level and is testing the resistance at the 20 EMA at 91.30. In case this test is successful, the U.S. Dollar Index will gain additional upside momentum and head towards the resistance at 91.50 which will be bearish for EUR/USD.

Yesterday, EU reported that Euro Area Manufacturing PMI increased from 62.5 in March to 62.9 in April compared to analyst consensus of 63.3. U.S. Manufacturing PMI report was also a bit worse than expected as U.S. Manufacturing PMI increased from 59.1 to 60.5 compared to analyst consensus of 60.6. While the reports did not meet analyst expectations, they highlighted the strength of the rebound in the manufacturing segment.

There are no important economic reports scheduled to be released in the EU today so foreign exchange market traders will focus on the dynamics of U.S. government bond markets. Treasury yields have started to rebound after yesterday’s pullback, and the continuation of this rebound may provide additional support to the American currency.

Technical Analysis

eur usd may 4 2021

EUR/USD faced strong resistance at 1.2060 and pulled back. Currently, EUR/USD is trying to settle below the 20 EMA at 1.2025. If this attempt is successful, EUR/USD will move towards the support at 1.1990.

A successful test of the support at 1.1990 will open the way to the test of the next support level at 1.1965. In case EUR/USD declines below the support at 1.1965, it will head towards the next support at 1.1925.

On the upside, EUR/USD needs to settle back above the 20 EMA to have a chance to develop upside momentum in the near term. The next resistance level is located at 1.2040.

If EUR/USD settles above the resistance at 1.2040, it will head towards the resistance at 1.2060. A move above this level will open the way to the test of the resistance at 1.2090.

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EUR/USD Bearish Breakout Starts ABC Zigzag Pattern Towards 1.1875

The EUR/USD broke the support trend line (dotted green) after completing 5 strong bullish waves.The old uptrend has been replaced by a new downtrend.

This article analyses what to expect from the price and wave patterns. We also review key targets and decision zones.

Price Charts and Technical Analysis

EUR/USD 4.5.2021 4 hour chart

The EUR/USD seems to have completed 5 waves (grey) of wave 5 waves (pink). This price swing is probably a wave A (purple) of a larger ABC (purple) zigzag correction. The ABC could fit within a wave B (red) of a larger ABC (red) pattern:

  1. If price action is going to move lower in wave B (purple), then it will likely create an ABC (pink) pattern downwards.
  2. Usually speaking, the wave A (pink) of a zigzag finishes at the 38.2% Fib and 144 ema close.
  3. A 3 wave bounce (green arrows) from the support could confirm a wave B (pink).
  4. A bearish reaction (orange arrow) at the resistance zone could confirm a wave C (pink).
  5. The main target of the wave C is the 61.8% Fibonacci level. This is where the wave B (purple) could end and the wave C (purple) could start (blue arrow).
  6. A break below the bottom invalidates this wave outlook. A break above the top places it on hold and could indicate an uptrend or a different type of correction in wave B (purple) – for instance not a zigzag but a ABC flat.

On the 1 hour chart, price action has broken below the support trend lines (dotted green) and the 144 ema, which is indicating a shift from an uptrend to a downtrend:

  1. The bearish bounce at the 50% Fibonacci level seems to complete a bullish ABC (orange) pattern in wave 4 (grey).
  2. A lower low could confirm the wave 5 (grey) in wave A (pink) at the Wizz 5 and -27.2% Fib target.
  3. A bullish bounce (green arrows) could indicate the wave B (pink).
  4. A break above the resistance trend line (orange) and the 144 ema could indicate that the wave 4 and 5 (grey) of A (pink) has already been completed. Price could move up to the Fibonacci levels.
  5. Only a deep push up invalidates this temporary bearish wave analysis.

EUR/USD 4.5.2021 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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