EURUSD Technical Analysis : Inverse Head And Shoulders Pattern
Fundamentals:
The EUR gained not on self-strength, but on dollar’s weakness. Last week was not a good week for USD. USD started the week with a soft tone and started to lose weight Monday by comments from US President Trump as he criticized Powell’s decision as chief of the Federal Reserve over its higher rates policy. The dollar is getting too expensive for Trump, and with the ongoing trade war, he wants to keep a lid on borrowing costs and the Dollar competitive.
The FOMC Minutes released last Wednesday confirmed the rate hike in September. Some economists have noted that while the U.S. economy has enough momentum to support two more rate hikes this year, the outlook is a lot more uncertain heading into 2019. Currently, markets are pricing in a more than 90% chance of a rate hike in September and a more than 60% chance of a fourth rate hike in December.
Markets focused on FED chairman’s comments on Jackson Hole Symposium. He was confident about economic growth and said that gradual rate hikes remain appropriated if strong growth in income and jobs continues. However, minor dovish adjustments to his rhetoric that anyway sent the dollar back into sell mode.
Technically:
EURUSD made an attempt to break out 1.16300 resistance but ended the week at 1.16200. We see an inverse head and shoulders pattern on the chart. The neckline is located at 1.16300. Break and close above 1.16300 may take the pair 1.17190. The structural target of the formation is 1.19500.
If the pair fails to break above 1.16300, it is likely to test 1.15700 and 1.15300.
To talk about a midterm trend reversal, we need to see the daily closings above 1.17200.
The EUR gained not on self-strength, but on dollar’s weakness. Last week was not a good week for USD. USD started the week with a soft tone and started to lose weight Monday by comments from US President Trump as he criticized Powell’s decision as chief of the Federal Reserve over its higher rates policy. The dollar is getting too expensive for Trump, and with the ongoing trade war, he wants to keep a lid on borrowing costs and the Dollar competitive.
The FOMC Minutes released last Wednesday confirmed the rate hike in September. Some economists have noted that while the U.S. economy has enough momentum to support two more rate hikes this year, the outlook is a lot more uncertain heading into 2019. Currently, markets are pricing in a more than 90% chance of a rate hike in September and a more than 60% chance of a fourth rate hike in December.
Markets focused on FED chairman’s comments on Jackson Hole Symposium. He was confident about economic growth and said that gradual rate hikes remain appropriated if strong growth in income and jobs continues. However, minor dovish adjustments to his rhetoric that anyway sent the dollar back into sell mode.
Technically:
EURUSD made an attempt to break out 1.16300 resistance but ended the week at 1.16200. We see an inverse head and shoulders pattern on the chart. The neckline is located at 1.16300. Break and close above 1.16300 may take the pair 1.17190. The structural target of the formation is 1.19500.
If the pair fails to break above 1.16300, it is likely to test 1.15700 and 1.15300.
To talk about a midterm trend reversal, we need to see the daily closings above 1.17200.
Trade closed: target reached:
As we have mentioned in our previous analysis EURUSD has reached 1.17200.
Fundamentally: Italian Bond yields hit 3 months high on concerns over the country’s spending policies. This can be the foot steps of a new crisis in Eurozone.
Technically: As we have mentioned in our analysis, target of the I SHS pattern formation is 1.19500.
1.17200 is the key resistance. If the pair makes Daily Closings above 1.17200, the targets of the pair will be 1.17800 and 1.18400.
The main trend is still bearish and bears will be waiting for a fresh selling opportunities.
Fundamentally: Italian Bond yields hit 3 months high on concerns over the country’s spending policies. This can be the foot steps of a new crisis in Eurozone.
Technically: As we have mentioned in our analysis, target of the I SHS pattern formation is 1.19500.
1.17200 is the key resistance. If the pair makes Daily Closings above 1.17200, the targets of the pair will be 1.17800 and 1.18400.
The main trend is still bearish and bears will be waiting for a fresh selling opportunities.
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