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#1 21-08-2020 09:59:49

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 2910
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EUR/USD: the pair could retrace back to support at $1.1700

EUR/USD: the pair could retrace back to support at $1.1700


Will the U.S. dollar end its 2-month straight-line decline against the backdrop of massive monetary creation by the U.S. Federal Reserve? This is fundamentally possible with the confirmation that the US economy is once again managing to create jobs and reduce the unemployment rate, now at 10.1% of the working population according to the latest jobs figures (NFP report). The unemployment rate had reached 14.9% in the heart of the great global confinement.

The period is also favourable for a buyback of short US dollar, the volume being particularly low this month. In addition to this, the US 10-year bond yield is well supported at 0.50% and the outlook for US activity statistics for last month, which will be published today. But the most important figures are today's Markit's PMI indices for this month.

The fall of the USD is one of the dominant technical factors of the summer, with an impact on all asset classes, with the strong bearish trend of the USD against the backdrop of massive liquidity injections by the FED into the US financial system. The amounts injected are five times higher in the US than in the Eurozone.

But, 2 days ago, forex trading gave a forewarning of a technical rebound of the USD against a basket of major currencies. This signal was given with Wednesday's release of the U.S. Federal Reserve Minutes, a report that did not bring any new monetary elements.

Technical analysis of the EUR/USD suggests that a correction movement may be taking place in the short-term. A bullish technical trap has taken place above the $1.1909 resistance level, a false bullish range exit, coupled with a bearish price/RSI divergence. This technical signal should result in a return of the EUR/USD rate back towards the $1.1700 support.

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