News & Analysis at your fingertips.

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
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
Oil - US Crude
Bullish
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
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
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • Technical indicators are chart analysis tools that can help traders better understand and act on price movement. Learn more about the importance of technical analysis here: https://t.co/NpC1D8y4Aa https://t.co/gaUllv1kra
  • Heads Up:💶 ECB Guindos Speech due at 09:15 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-18
  • Join @PaulRobinsonFX 's #webinar at 5:30 AM ET/9:30 AM GMT as he goes over London #FX & #CFD charts for the next week. Register here: https://t.co/CoMkMA0pdF https://t.co/TBv201f9hp
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/td5WA4hCZC https://t.co/RENalKFdNu
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.33%, while traders in NZD/USD are at opposite extremes with 66.32%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/iWNOm3LGo4
  • Commodities Update: As of 07:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.08% Silver: 0.47% Gold: 0.44% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/sjPmNBF4Dr
  • Entry orders are a valuable tool in forex trading. Traders can strategize to come up with a great trading plan, but if they can’t execute that plan effectively, all their hard work might as well be thrown out. Learn how to place entry orders here: https://t.co/lAFyv1gM0P https://t.co/qmkJaNY3wf
  • China flexing their muscles as US look to sell $7bln worth of arms to Taiwan https://t.co/RYV8MnfYvN
  • Forex Update: As of 07:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.56% 🇦🇺AUD: 0.13% 🇪🇺EUR: 0.10% 🇨🇦CAD: 0.09% 🇨🇭CHF: 0.04% 🇬🇧GBP: 0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/0Ysc7X6418
  • $USDJPY edging closer to jawboning levels https://t.co/X6Er140Zbt
EUR/USD Rally Continues to Be Accompanied by Extreme RSI Reading

EUR/USD Rally Continues to Be Accompanied by Extreme RSI Reading

2020-08-07 00:05:00
David Song, Strategist
Share:

EUR/USD Rate Talking Points

EUR/USD trades to fresh 2020 high (1.1916) ahead of the update to the US Non-Farm Payrolls (NFP) report, and the extreme reading in the Relative Strength Index (RSI) is likely to be accompanied by a further appreciation in the exchange rate like the behavior seen in June.

EUR/USD Rally Continues to Be Accompanied by Extreme RSI Reading

EUR/USD extends the series of higher highs and lows from earlier this week as RSI sits in overbought territory, and it remains to be seen if the update to the NFP report will influence the exchange rate as the US economy is anticipated to add nearly 1.6 million jobs in July.

Image of DailyFX economic calendar for US

At the same time, the Unemployment Rate is expected to narrow to 10.5% from 11.1% the month prior, and the ongoing improvement in the labor market may trigger a bullish reaction in the US Dollar as it put pressure on the Federal Reserve to scale back its emergency measures.

However, it seems as though the Federal Open Market Committee (FOMC) is in no rush to alter the course for monetary policy as the central bank extends its lending facilities and pledges to “increase our holdings of Treasury and agency mortgage-backed securities at least at the current pace.

In turn, the FOMC may stick to the status quo at the next interest rate decision on September 16 as the committee warns that “it will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year,” and more of the same from Chairman Jerome Powell and Co. may continue to drag on the US Dollar as the central bank remains “committed to using our full range of tools to support the economy in this challenging time.

Until then, current market conditions may keep EUR/USD afloat as the RSI holds above 70, while the crowding behavior in the Greenback carries into August even though the DXY indexplummets for sixth consecutive weeks.

Image of IG Client Sentiment for EUR/USD rate

The IG Client Sentiment report shows retail traders have been net-short EUR/USD since mid-May, with the latest update showing 32.19% of traders currently net-long the pair as the ratio of traders short to long stands at 2.11 to 1.The number of traders net-long is 10.06% higher than yesterday and 4.05% lower from last week, while the number of traders net-short is 7.24% lower than yesterday and 7.77% lower from last week.

Recent price action in EUR/USD appears to be fueling net-long interest ahead of the NFP report as it extends the series of higher highs and lows from earlier this week, while the decline in net-short positions suggests stop-loss orders are being triggered as the exchange rate trades to fresh 2020 high (1.1916).

Looking ahead, a further shift in EUR/USD positioning may fuel the rebound in the IG Client Sentiment index as it returns from the extreme reading in June, but current market conditions may keep the exchange rate afloat as the RSI holds above 70, while the crowding behavior in the US Dollar persists.

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, a ‘golden cross’ materialized in EUR/USD towards the end of June as the 50-Day SMA (1.1414) crossed above the 200-Day SMA (1.1105), with the moving averages extending the positive slopes into the second half of the year.
  • At the same time, a bull flag formation panned out following the failed attempt to close below the 1.1190 (38.2% retracement) to 1.1220 (78.6% expansion) region in July, with the Relative Strength Index (RSI) helping to validate the continuation pattern as the oscillator bounced along trendline support to preserve the upward trend from March.
  • Will keep a close eye on the RSI as it sits in overbought territory for the third time in 2020, with the bullish price action in EUR/USD likely to persist as long as the indicator holds above 70 amid the behavior seen in June.
  • EUR/USD has cleared the September 2018 high (1.1815) as it extends the series of higher highs and lows from earlier this week, with the break/close above the Fibonacci overlap around 1.1810 (61.8% retracement) to 1.1850 (100% expansion) bringing the 1.1960 (38.2% retracement) to 1.1970 (23.6% expansion) region on the radar.
  • It remains to be seen if/how EUR/USD will respond to the psychologically important 1.2000 handle, with the next topside hurdle coming in around 1.2080 (78.6% retracement) to 1.2140 (50% retracement).
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