The euro currency incurred more losses against the US dollar last week as traders turned bullish towards the buck as strong weekly jobs data in the United States kept hopes of the FED unwinding QE towards the end of this year.
Downside pressure in the EURUSD pair was actually limited after the June jobs report showed that 850,000 new jobs had been created last month, but a 0.2 percent monthly uptick in the US unemployment rate, and a mild rise in personal spending and income held back further upside in the US dollar.
Technical traders may have also noticed that the EURUSD pair had briefly slipped under a multi-year rising trendline on the daily chart last week, although appetite for further selling under the trendline has so far been lacking.
Another thing that technical traders and EURUSD bulls may have noticing is that the EURUSD pair has been forming bullish divergence during this recent decline. Bullish MACD price divergence basically extends towards the 1.2000 area.
Should we see the EURUSD pair holding above the 1.1850 area this week it would not come as any shock to me to see bulls rallying the EURUSD back towards the 1.2000 mark.
In terms of current sentiment, the ActivTrader market sentiment tool shows that bullish sentiment has dipped to 47 percent. This is quite dramatic change as 78 percent of traders were expecting further EURUSD gains last week.
This is good news for the EURUSD as bearish sentiment is increasing, which is generally a bullish contrarian signal. It is possible that the EURUSD pair may start to finally rally if sentiment continues to drop this week.
EURUSD Short-Term Technical Analysis
The EURUSD pair has a formed a head and shoulders pattern which threatens to take the EURUSD pair back towards the 1.1700 level if sellers can gain traction below the 1.1850 level.
If we see the EURUSD pair holding above the 1.1850 level I would expect an attack back towards the 1.1900 resistance level. A big clue for coming strength will be if the EURUSD holds above 1.1900, which is likely to set-off a rally towards the 1.2000 area.
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EURUSD Medium-Term Technical Analysis
The daily time frame shows that the EURUSD pair has formed bullish MACD price divergence, which means that the MACD histogram has been rising while the price drops. The divergence extends up to 1.2000 now.
Another key feature on the daily price chart is a massive triangle style pattern. The EURUSD pair briefly slipped under the triangle pattern last week.
Failure to hold under the triangle could result in the EURUSD pair bouncing back towards the top of the triangle, around the 1.2300 resistance area.
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© 2019 High Leverage FX - All Rights Reserved.