Bottom line:  EURUSD structure continues to favour bulls until 1.0636 is intact. A contracting triangle might be unfolding on lower timeframes before EURUSD could break higher towards 1.1500.

Fundamental Outlook:

The EURO might drop against the US Dollar as we face a global recession ahead. The optimism over flattening curve of COVID-19 pandemic might be overshadowed by fears of a looming recession. Sentiment might shift towards US Dollar, considered to be safe haven. EURUSD trades around 1.0850/55 levels for now having traded in a tight range over the last week.

Singapore’s largest Oil trading firm Hin Leong Trading has filed for bankruptcy protection over about $4 billion debt. Oil prices have taken major hit in the past several weeks since COVID-19 crisis has dented global demand. An agreement reached by OPEC+ members to cut production and the end of price war between Russia and Saudi Arabia has failed to curb price decline. WTI Crude is trading around $15.30 at this point in writing, down almost 16%.

On the COVID-19 crisis, focus now turns on the daunting task of reopening economies after facing shutdown for several week. The worst might be behind us but challenge to avoid a resurgence remains.

Technical Analysis:

EURUSD weekly chart suggests that bulls are expected to remain in control as prices remain above 1.0636 lows. Medium term price targets could be seen towards 1.1500 levels, which is resistance for now. Immediate price support is at 1.0768, April 06, 2020 low.

EURUSD has traded sideways within a range over the last week. We could still see some range bound trading before prices break higher towards 1.1500. After the rally between 1.0636 and 1.1151 earlier, EURUSD has retraced just below the fibonacci 0.618 levels.

Most traders might be willing to remain long with a protective stop just below 1.0768 or 1.0636, and projected targets above 1.1500 respectively.

The Engulfing Bullish candlestick pattern on the weekly chart still remains valid with prices trading well above the 1.0636 mark.

Prepared by

Harsh Japee, Technical Analyst.

EURUSD Chart

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