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Downside Momentum Could See a Reversal due to U.S. Dollar's Downtrend
Economic
Forex
Summary:
If the job openings and labor survey data released later in the U.S. falls short of expectations, the euro may experience a slight rebound; however, political turmoil in France could constrain the extent of the increase.
Buy
TradingEURUSD
EXP
1.05144
Entry Price
1.09350
TP
1.02900
SL
1.04992 -0.00093 -0.09%
0
Point
Flat
1.02900
SL
CLOSING
1.05144
Entry Price
1.09350
TP
Fundamentals
The EURUSD rose above 1.0500 during the European session on Tuesday. Improved risk sentiment provided support for the EURUSD, creating resistance against a U.S. dollar rebound. However, the upward potential appears constrained due to political instability in France.
The U.S. employment data is highly anticipated. If the October job vacancy figures fall short of expectations, it would bolster expectations for a Federal Reserve rate cut and exert downward pressure on the U.S. dollar. However, any subsequent increase in the EURUSD will require a breakthrough above the 1.0550 range.
Additionally, the market's reaction to the widening spread between French and German bonds, along with the rise in French sovereign credit default swaps, is negatively impacting the euro.
Technical Analysis
The EURUSD has failed to sustain its bullish momentum above the 1.0609 level following a rebound from a two-year low of 1.0331, increasing the likelihood of further downward movement.
According to momentum indicators, the rebound over the past ten days may have reached its conclusion. The stochastic oscillator has shown a bearish crossover within the overbought zone on the ％K and ％D, while the relative strength index is trending downward below neutral zone.
If the price does not undergo a significant adjustment, the outlook remains bearish; a break below 1.0330 would reinstate the downtrend from 1.1213. Additionally, a sustained drop below the critical Fibonacci level of 1.0404 would signal a stronger bearish implication.
On the other hand, due to the structural divergence of the U.S. dollar compared to the euro, if the EURUSD can rise above 1.0609, it would confirm a short-term bottom and shift the trend to bullish, with the previous support level of 1.0760 becoming a resistance level.
Overall, the EURUSD has been in a bearish trend since September 25. Signs of upward adjustment are diminishing, particularly as long as the price remains below 1.0609.
Trading Recommendations
Trading Direction: Buy
Entry Price: 1.0502
Target Price: 1.0935
Stop Loss: 1.0290
Valid until: December 18, 2024 23:55:00
Support: 1.0475, 1.0424, 1.0705, 1.0332
Resistance: 1.0525, 1.0563, 1.0609, 1.0634
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