Background
In a quiet week for hard economic data on both sides of the Atlantic, EURUSD has traded in line with movements in the US versus Germany 10-year bond spread. The gap in favour of the USD has narrowed from 230 to 190 basis points in recent weeks, taking EURUSD up with it.Â
Next week the data calendar is busy, starting with the Federal Reserve’s inflation benchmark on Monday, German CPI on Tuesday and the Eurozone equivalent Wednesday. US jobs data bookends the week.
The euro has rallied strongly from the mid 1.0800s (attaining my targets of 1.1120 and 1.1270/85) and this week’s consolidation is now mature.
Today’s technical trading focus is upon a possible Head and Shoulders pattern, which has been developing over the past days (refer hourly chart below). A (sustained) break below the 1.1170 support level is required to confirm this short-term reversal pattern, to then yield a downside target of 1.1070.
Entry: today: EURUSD is seen as a sell on a break below 1.1170 (directly above 1.1250 first however, cancels).
Stop: just above 1.1200, initially.
Target: 1.1088.
Time horizon: allow a few days for target to be met.
EURUSD hourly (click to expand)
Source: ThomsonReuters Â
EURUSD daily (click to expand)
Source: ThomsonReuters Â
EURUSD weekly (click to expand)
– Edited by Gayle Bryant
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