Dollar index:
The weekly price action confirmed a trip top pattern, and the price was clearly rejected at 100 and 200MA on the weekly chart. Shifting to monthly, price action is facing stiff resistance at 50ma. Overall, the dollar index is due to a near-term correction. Levels of 93.50 and 93.30 are crucial supports.
EUR: Following the colossal ejection of 1.1900 in EUR, we are now finally entered the major near-term support zone.
The weekly and monthly patterns suggest the euro texted the support level defined by the following:
All these three factors suggest a short squeeze would be possible towards 1.1670 and 1.1700 initially.
Thick support layer:
As shown on the below chart, the price holds the 200MA thrice and holds the lower Bollinger band twice. Underneath the 50.0 fib exists at 1.1490, which was the previous swing high in early March 2020. Overall, a thick support layer spread between 1.1520-1.1490 levels.
If the price is moving higher, 1.1670 and 1.1700 are the levels to watch out for. This move we are anticipating is only for the short-term as the overall trend remains bearish.
Funding currency:
EUR yields via the 3m forwards are now -0.7% and make the EUR a preferred funding currency., ING said.
For most of this year, the EUR price action has been driven by two seemingly conflicting factors. The first driver is the role of the EUR as a funding currency for FX carry trades, while the second is its appeal as a stable and liquid investment currency that underpins the attractiveness of the Eurozone stock markets and the higher-yielding EGBs, Credit Agricole said.
Previous resistance will become support: Here’s the chart
Medium-term:
The support is available at 1.1490; its 50.0fib reaction below here 1.1280 exists, which is it’s 61.8fib and 161.8fe.
Week ahead, Friday US unemployment claims and Flash Manufacturing and Services PMI for Germany and EA will be key.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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