- EURUSD gains over the past week have primary echoed US Dollar losses, as global financial markets have shifted to a “risk on” mode, with global geopolitical tensions easing.
- Positive news last week around the US-Sino trade war, Brexit and from Hing Kong have seen stock averages rally, whilst the US Dollar has weakened, having been previously strengthening, as a safe haven.
- This has allowed for a solid EURUSD recovery, having previously shifted to an intermediate-term more bearish theme in latter August with a plunge through some key supports (see below).
- However, going into Thursday’s ECB Meeting, at which a more dovish tone is expected, it will be interesting to see if EURUSD can sustain the current recovery theme.
EURUSD: Upside bias
A positive tone Monday to probe above 1.1057 resistance, after a strong rally last Thursday above 1.1050 resistance (which then failed back from below 1.1094, from 1.1085) and whilst above 1.1016/06 the bias stays higher for Tuesday.
The late August selloff through 1.1025 shifted the intermediate-term outlook to bearish.
- We see an upside bias for 1.1068; break here aims for 1.1085 and 1.1094.
- But below 1.1016/06 opens risk down to 1.0975.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 1.0839 and 1.0578.
- What Changes This? Above 1.1165 shifts the intermediate-term outlook back to neutral; above 1.1250 is needed for an intermediate-term bull theme.
4 Hour EURUSD Chart