Long

EURUSD Daily Technical Analysis

Updated

Hi Traders!
If we look closely at Daily Chart, the EURUSD pair could form a very interesting Reversal Pattern in the short term. From a technical point of view an Engulfing Pattern could appear with a minimum Target around 1.087 area (see chart below), but if this will work correctly as a “reversal” the projection could be even more interesting.

That said, if we have Engulfing Pattern in the daily close, it might be interesting to try to take short position on the pullback with stop loss below the previous low or failure of the Pattern. Traders who have followed our previous analyses on our Blog can handle the long position taken on the Harmonic Structure (ABC Pattern) on 1H chart.

The dollar slipped on Friday as investors fretted U.S. payrolls data could be weak after an unexpected slump in U.S. manufacturing raised concerns about a slowdown in the world's largest economy and lifted traditional safe-haven currencies.
In conclusion, next week we have interesting macro events as well as follow the geo-political dynamics (Iran-Israel) and from the technical point of view we have a potential Reversal Pattern to follow today, let's see what will happen in the coming hours.

Note

Daily Chart update:

Note

The U.S. dollar dropped to a four-month low on Friday after a weaker-than-expected employment report for July raised expectations that the Federal Reserve will cut interest rates by 50 basis points in September as the economy sours. Employers added 114,000 jobs, below expectations for an increase of 175,000. The unemployment rate rose to 4.3%, above economists expectations that it would be unchanged on the month at 4.1%.
Traders are now pricing in a 71% probability that the Fed will cut rates by 50 basis points in September, up from 31% before the data was released and from 22% on Thursday, according to the CME Group's FedWatch Tool. A cut of at least 25 basis points is fully priced in for September and 116 basis points of easing is now expected by year-end. (FEDWATCH)
"This is what a growth scare looks like. The market is now realizing that the economy is indeed slowing," said Wasif Latif, president and chief investment officer at Sarmaya Partners in Princeton, New Jersey.
The dollar index was last down 1.1% at 103.21 and got as low as 103.12, the lowest since March 14. It is the largest one-day percentage drop since November. Treasury yields also tumbled, with interest rate sensitive two-year yields (US2YT=RR) dropping as low as 3.845%, the lowest since May 2023, and benchmark 10-year yields reaching a low of 3.79% for the first time since Dec. 27.
The U.S. Labor Department said that Hurricane Beryl, which made landfall in Texas on July 8, had "no discernible effect" on the jobs data, discounting one theory that may have explained the weakness. "There's no silver lining anywhere as far as I can tell. They say they didn't have any kind of hurricane effects, and if they did, it's not enough to offset the degree of softness that we're seeing," said Steve Englander, head of global G10 FX research at Standard Chartered's New York Branch. Some economists, however, were not convinced that Beryl had no impact, and saw some spots of brightness in Friday's jobs data. The Fed kept interest rates unchanged at the conclusion of its two-day meeting on Wednesday and Fed Chair Jerome Powell said that interest rates could be cut as soon as September if the U.S. economy follows its expected path.
Chicago Fed President Austan Goolsbee said on Friday the U.S. central bank should move in a "steady" way, a mild pushback against the market pricing for rate cuts. Softer jobs data, a weak manufacturing report and some disappointing corporate outlooks in recent days have increased fears that the economy is worsening at a faster pace. But despite Friday's weak jobs report, Englander notes that "most of the other indicators are not consistent with a really sharp slowdown at the moment... Everything is soft, but nothing is catastrophically soft."
New economic releases will now be even more closely watched for confirmation on whether the growth outlook is as bad as feared.

Note

New idea on chart below:

Note

🔴 The dollar fell to a three-week trough against the yen on Monday and steadied near multi-month lows against the euro and sterling as investors weighed the prospect of the Federal Reserve soon starting on a series of interest rate cuts. In a much-anticipated speech on Friday at the annual economic conference in Jackson Hole, Wyoming, Fed Chair Jerome Powell endorsed an imminent start to interest rate cuts, declaring further job market cooling would be unwelcome.
"Powell did not say anything new but officially validated some of the things that markets were pricing in, including the idea of a cut, shift of focus from inflation to labour market," said Samy Chaar, chief economist at Lombard Odier in Geneva. However, he did not see the dollar falling much more in the short term.

"Huge dollar weakness from here would mean that the market is not pricing in enough cuts which I feel is a bit of an exaggeration."
Traders unanimously expect the Fed to kick off its loosening campaign on Sept. 18, but see about 39% odds of a super-sized 50-basis point reduction, according to the CME Group's FedWatch Tool. That's up from 25% odds a week earlier.
Trading activity was expected to be lighter than usual, with UK markets closed for a public holiday.

TheAnonymousBanker

Also on:

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.