Bottom line: EURUSD structure remains bullish until prices stay above 1.0636 lows. The weekly chart suggests a long term bullish reversal against 1.0636 levels. Bulls need to break past 1.1500 resistance to confirm.

Fundamental Outlook:

EURUSD exchange rate has dropped over 250 pips since recent highs above 1.1400 mark. The risk currency had come under pressure over fears of another wave of COVID-19 infections. It is quite possible that the EURO might have found support around 1.1167 today but a continued shift towards safe haven US Dollar might dampen EURUSD exchange rate further.

FTSE might come under renewed pressure after recovering some lost ground over the last week. The indice rallied almost 2% over the last week, before closing at 6256. The rising tensions over border dispute between India and China may fuel risk aversion further this week.

GBPUSD continued its slide over the last week and dropped over 300 pips from the highs at 1.2688 levels. The US Dollar gained against most currencies, as risk assets slid over the rise in COVID-19 infections in US and other Asian countries. Sterling Pound would also take cues from Brexit developments over the week.

Technical Analysis:

EURUSD bulls might be preparing to resume higher after printing 1.1167 lows today. The currency trades just below 1.1200 mark and is expected to push towards 1.1500 resistance, keeping bullish structure intact. A break above 1.1260 would confirm bulls are back in control.

Structurally, EURUSD might have carved a meaningful bottom around 1.0636 mark and that bulls are expected to remain in control for the next several months. The EURO has found bottom around fibonacci 0.786 retracement of previous rally between 1.0340 and 1.2555 respectively.

An engulfing bullish pattern formed after printing 1.0636 lows also confirms a potential long term bullish reversal ahead. Traders might be inclined to initiate fresh long positions around current price (1.1190) with protective stops below 1.1000 and projected targets above 1.1500 respectively.

Prepared by

Harsh Japee, Technical Analyst.

EURUSD Chart

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