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Sep 01 - 09:55 PM

EUR/USD - COMMENT-EUR/USD Retreat A Warning Or A Buying Opportunity?

By John Noonan  —  Sep 01 - 08:40 PM

The surging euro ran into a wall above 1.2000 on Tuesday and the subsequent retreat to just above 1.1900 has sparked a debate over whether the correction was simply a speeding ticket or a warning that a top is forming.

The technical picture remains bullish on balance, with the 5, 10 and 21-day moving averages (DMA) aligned in a bullish formation.
Only a close below the 10 DMA at 1.1860 would warn that a top is in place.

The 1.2000 level did not have technical significance, but was a psychological barrier that sparked some profit-taking.
Very often psychological levels that have no technical bearing only result in temporary setbacks to an underlying trend.

The fundamental case for EUR/USD to continue trending higher is grounded in central bank expectations.
The bearish U.S. dollar view is largely based on dovish a Federal Reserve outlook in the wake of last week's landmark policy shiftnL1N2FT0PR.
Fed Governor Brainard reinforced the dovish stance in a speech on Tuesday, saying the U.S. economy needs more Fed stimulus in coming months nL1N2FY1HR.

The technical and fundamental backdrop favours a resumption of the EUR/USD uptrend to levels above 1.2000, but a daily close below the 10 DMA would cloud the bullish outlook in the short term.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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