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#1 05-09-2019 14:11:15

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EUR/USD: a rise is strengthening, what are the next technical steps?

EUR/USD: a rise is strengthening, what are the next technical and fundamental steps to watch out for? (Commerzbank)

The EUR/USD pair continues its rebound today, with a recent new high of 1.1045, while the dollar continues to decline against most other currencies.

From a technical point of view, it should be noted that this morning's last jump in the rise led to a test of the 200-hour moving average, which is displayed as an immediate resistance at 1.1040, just ahead of the intermediate psychological threshold of 1.1050.

The bullish profile of the pair is therefore strengthening, but as we already stated yesterday, a confirmed break above the 200-hour moving average and above 1.11 seems necessary for us to consider long positions over a few days.

On the downside, the major psychological threshold of 1.10 and the 100-hour MA at 1.0990 form a key support zone, the break of which would attest to a takeover of control by sellers, with the recent annual lows at 1.0925 which could be targeted.

Hourly EUR/USD chart

What is the latest market news?

Relief with regard to the US/China trade war

The most significant news this morning was the announcement of a meeting between US and Chinese negotiators at ministerial level next month, good news for the trade war that supports risk appetite on global stock markets.

Chinese Premier Liu announced that the Chinese side had agreed to travel to Washington "early next month" after a phone call with US Treasury Secretary Steven Muchin and US Trade Representative Robert Lighthizer, according to a statement from China.

"The sense of risk was reinforced yesterday by Hong Kong's decision to withdraw the extradition bill, the possible monetary easing in China seeking to reduce reserve requirements for banks and the risk of an imminent Brexit without transactions."

Impact on the Eurodollar pair: It should be noted that an improvement in US/China relations reduces the likelihood of the Fed unleashing too much quantitative easing, which should support the dollar, but this does not seem to be the case at the moment.

The risk of a recession in Germany is increasingly likely

The German economy continues to worry, with another disappointing statistic this morning. Orders to industry fell by 2.5% 2 months ago, cancelling the previous month's rebound.

Faced with these figures, ING bank analysts say that "over the year, order intake was down by 5.6%. Data on industrial orders have been very volatile in recent months, with bulk orders often confusing the maps. Excluding wholesale orders, industrial orders in July would have increased by 0.5%. However, the trend in industrial orders is far from encouraging. Since the beginning of the year, industrial orders have fallen by an average of 1% per month."

Impact on the EUR/USD pair: The disappointing figures published this morning could have weighed on the euro, but this was not the case.

The economic calendar will be busy today

The rest of the day will also feature several key publications, most notably the ADP report on US job creation at 14:15. The consensus forecasts 148k job creation, after 156k the previous month.

Next is the weekly unemployment registrations and the US productivity of T2. Unemployment registrations are expected to remain stable at 215k, while productivity is expected to increase by 2.2% after 3.5% in Q1.

The August ISM for US services will also be on the agenda, and economists predict an increase to 54 points after 53.7 the previous month.

What is Commerzbank's forecast for the EUR/USD pair?

Lastly, we propose that you review Commerzbank's short-term forecasts for the pair.

Commerzbank analysts note that the euro "has not yet overcome the initial resistance, which is offered by the retracement from 23.6% to 1.1040, and we note that Elliott intraday wave counts are negative, which implies a possible new test of support at 1.0941/26 today."

"Short-term resistance is the short-term downward trend line at 1.1145 and the 200-day moving average at 1.1269, but the key resistance is 1.1328/51, the 2018-2019 downward channel and the 55-week moving average."

"Anything worth having is worth going for - all the way." - J.R. Ewing



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