With both Eurozone CPI and U.S. NFP reports scheduled for release, you can bet that I’m looking at EUR/USD this week!
The pair is trading just above the 1.0700 psychological handle, which isn’t surprising since we just saw a doji and the inflection point lines up with a trend line support that EUR bears have been respecting since December last year.
In this case, the trend line (or ascending channel) support is also around the 61.8% Fibonacci retracement of March’s upswing.
The cherry on top of this sweet bullish play is a bullish divergence on the daily time frame.
EUR/USD Daily Forex Chart Chart by TV
Can the euro still extend its gains against the U.S. dollar?
Now that U.S. lawmakers have penciled in a debt ceiling deal, the markets’ focus could turn back to guessing the Fed and ECB’s next plans.
In fact, the Eurozone CPI and U.S. NFP reports due on June 1 and 2 respectively might give solid clues on which central bank would have to tighten further in the next few months.
I’m not discounting more USD strength this week but, until we see fresh catalysts, I’m betting on the U.S. dollar losing some of its gains from the previous weeks.
EUR/USD, which is sitting on a trend line support, could bounce to the 1.0800 handle near the 100 SMA and 50% Fib.
The pair could even hit 1.0900 or 1.1000 if we see enough momentum!
Stops below the trend line make sense for now but scaling in or jumping in the uptrend is definitely on the trading plan as soon as I see a buying momentum.
What do you think? Will EUR find sustained support against USD?
