We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • 🇬🇧 Gfk Consumer Confidence Final (JUN) Actual: -27 Previous: -30 https://www.dailyfx.com/economic-calendar#2020-07-02
  • Asia Preview⬇️ - US stocks spiked on jobs data, Treasury lifeline to distressed airlines - Risk-on tilt could be derailed by US-China tensions over Hong Kong - #NZDJPY trading on the cusp of key resistance – what happens now? https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/07/02/NZDJPY-May-Fall-as-US-China-Tensions-Escalate-Over-Hong-Kong.html
  • Heads Up:🇬🇧 Gfk Consumer Confidence Final (JUN) due at 23:01 GMT (15min) Previous: -36 https://www.dailyfx.com/economic-calendar#2020-07-02
  • Understanding the US-Mexico relationship and how the ebb and flow of economic activity in the former impacts the latter is crucial for trading USD/MXN. Get your $USDMXN market update from @ZabelinDimitri and @FxWestwater here:https://t.co/oCRV13zbF0 https://t.co/gSzGAUJx4F
  • RT @FxWestwater: S&P 500 Rallies as Key Insiders Dump Stock, Traders Add Shorts - @DailyFX $SPX $SPY https://www.dailyfx.com/forex/fundamental/article/special_report/2020/07/02/SP-500-Rallies-as-Key-Insiders-Dump-Stock-Traders-Add-Shorts.html https://t…
  • The Dow Jones may rise based on signals from trader positioning, placing the focus on resistance ahead. This is as the S&P 500 pressures a key falling trend line, will it hold? Find out from @ddubrovskyFX here:https://t.co/UvXqX50YIp https://t.co/rr2s58Zyls
  • Hey traders! Get your market highlights from @DailyFX Chief Strategist @JohnKicklighter. What are some charts and themes we are wrapping up with today? Find out 👇 https://t.co/HOGohRF7tD
  • Texas virus cases increase 4.7% vs prior 4.2% 7-day average - BBG
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.51% 🇨🇦CAD: 0.17% 🇦🇺AUD: 0.16% 🇯🇵JPY: -0.03% 🇬🇧GBP: -0.05% 🇪🇺EUR: -0.11% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/9dkCjQChjR
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Gold: 0.32% Silver: -0.26% Oil - US Crude: -0.74% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/WNWW8VibD8
EUR/USD Levels to Watch as Bull Flag Formation Takes Shape

EUR/USD Levels to Watch as Bull Flag Formation Takes Shape

2020-06-25 04:00:00
David Song, Strategist
Share:

EUR/USD Rate Talking Points

EUR/USDstruggles to extend the series of higher highs and lows from earlier this week amid concerns surrounding the EU-US trade truce, but a bull flag formation may unfold over the coming days as the Relative Strength Index (RSI) preserves the bullish trend from March.

EUR/USD Levels to Watch as Bull Flag Formation Takes Shape

EUR/USD pulls back from the weekly high (1.1349) as European Commissioner for TradePhil Hogan reveals that the Trump administration has “stepped back” from negotiations, with the official emphasizing that “we must acknowledge that the U.S. is now in a pre-election phase” during a conference with EU trade officials.

The renewed threat of an EU-US trade war may put pressure on the European Central Bank (ECB) to further support the monetary union as Chief EconomistPhilip Lane warns that the economic shock from COVID-19 “has been so large that overall activity will remain far below the pre-crisis level and the scale of the initial rebound in these weeks will not necessarily be a good guide to the speed and robustness of the recovery.

Lane states that the initial recoveryprocess is expected to be quite gradual,” with the Euro Area expected to return to pre-pandemic conditions “at the end of 2022,” and points out that “policy measures that operate primarily through the risk-free curve – like rate cuts – are unlikely to be as effective at the current juncture as they are in non-stressed conditions.”

In turn, Lane argues that the “evidence tilts the balance towards asset purchases as the more efficient tool in current circumstances,” and the ECB may utilize its balance sheet throughout 2020 as the central bank rules out a V-shape recovery.

It remains to be seen if the ECB will deploy more unconventional tools over the coming months amid the efforts to pass the COVID-19 recovery fund, with European Council President Charles Michel vowing to ‘start real negotiations with the member states, and will convene an in-person summit, around mid-July in Brussels.’

In turn, the ECB may merely attempt to buy time at the next meeting on July 16 even though the Governing Council stands ready to “adjust all of its instruments,” and the reluctance to implement lower interest rates may keep EUR/USD afloat as President Christine Lagarde and Co. appear to be on track to retain the current policy in the second half of the year.

With that said, EUR/USD may stage another attempt to test the March high (1.1495) as the exchange rate reverse ahead of the monthly low (1.1101), and a bull flag formation may unfold over the coming days as the Relative Strength Index (RSI) preserves the bullish formation from March.

Forex for Beginners
Forex for Beginners
Recommended by David Song
Forex for Beginners
Get My Guide

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss key themes and potential trade setups surrounding foreign exchange markets.

EUR/USD Rate Daily Chart

Image of EUR/USD rate daily chart

Source: Trading View

  • Keep in mind, the monthly opening range was a key dynamic for EUR/USD in the fourth quarter of 2019 as the exchange rate carved a major low on October 1, with the high for November occurring during the first full week of the month, while the low for December happened on the first day of the month.
  • The opening range for 2020 showed a similar scenario as EUR/USD marked the high of the month on January 2, with the exchange rate carving the February high during the first trading day of the month.
  • However, the opening range for March was less relevant amid the pickup in volatility, with the pullback from the yearly high (1.1495) producing a break of the February low (1.0778) as the exchange rate slipped to a fresh 2020 low (1.0636).
  • Nevertheless, EUR/USD appeared to be on track to test the March high (1.1495) after breaking out of the April range, but the exchange rate struggles to retain the advance from the start of the month amid the failed attempt to close above the Fibonacci overlap around 1.1390 (61.8% retracement) to 1.1400 (50% expansion).
  • It remains to be seen if a bull flag formation will unfold over the coming days as the Relative Strength Index (RSI) bounces from trendline support to preserve the bullish trend from May, while a ‘golden cross’ formation appears to be taking shape as the 50-Day SMA (1.1029) is on the cusp of crossing above the 200-Day SMA (1.1031).
  • Lack of momentum to close above the 1.1340 (38.2% expansion) hurdle undermines the scope for a continuation pattern as EUR/USD slips below the 1.1270 (50% expansion) to 1.1290 (61.8% expansion) region, with the exchange rate coming up against the Fibonacci overlap around 1.1190 (38.2% retracement) to 1.1220 (78.6% expansion).
  • Need a close above 1.1340 along with an extension of the bullish RSI formation to bring the 1.1390 (61.8% retracement) to 1.1400 (50% expansion) region on the radar, with the next area of interest coming in around 1.1430 (23.6% expansion) to 1.1450 (50% retracement), which largely lines up with the monthly high (1.1423).
Traits of Successful Traders
Traits of Successful Traders
Recommended by David Song
Traits of Successful Traders
Get My Guide

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.