Bottom line: EURUSD long term structure continues to remain bullish against 1.0636 low since March 2020. The currency might have carved a meaningful top around 1.2000/10 levels early this month. Bears might be poised to push lower towards 1.1165/75 levels over the next several weeks.

 Fundamental Outlook:

EURUSD has been trading in a range between 1.1730/50 and 1.1910/20 since last few sessions. The exchange rate risen to 1.2010 levels early this month and might come under renewed selling pressure around 1.1930/50 mark in the near term. If global indices manage to rally in the near term, it could boost the risk associated exchange rate as well, pushing through 1.1950/60 handle.

FTSE had dropped by -0.81% on Friday, closing around 6000 mark. Global indices closed in the red with Dow Jones down (-0.88%), SPX500 (-1.12%) and DAX (-0.70%) respectively. FTSE futures trade marginally low at 5988 as we prepare to publish. Investor sentiment continues to remain vulnerable over Brexit uncertainties and further lockdowns over COVID-19 infections.

GBPUSD has dropped sharply from close to 1.3500 highs on September 01, 2020. The exchange rate trades around 1.2960 as we prepare to publish. It might face further selling pressure towards 1.3200/1.3300 levels over the next few trading sessions, if US Dollar continues to gain. Brexit uncertainties would only add more pressure. 

Technical Analysis:

EURUSD might have turned lower from 1.2000/10 handle, print on September 01, 2020. The currency might hit resistance around 1.1950 mark going forward. Bears are looking poised to turn lower from there towards 1.1165.75 mark at least, if not a trend reversal.

EURUSD had remained in control of bulls in last several weeks and managed to carve a series of higher highs and higher lows from 1.0636 through 1.2000/10 respectively. The above rally has unfolded as an impulse wave, which should be followed by a corrective wave ideally in the opposite direction.

EURUSD should be looking to produce a corrective drop towards 1.1165/75 levels. Also note that fibonacci 0.618 retracement of the entire rally is also seen through 1.1160 levels. High probability remains for a bullish bounce, if prices manage to reach there.

Most traders might be preparing to initiate fresh short positions around 1.1930/50 levels over the next few trading sessions. The protective stops might be placed above 1.2000/10 levels and target potential towards 1.1165 levels respectively.

Prepared by

Harsh Japee, Technical Analyst.

EURUSD Chart

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