- Broad US Dollar weakness again surfaced on Wednesday 26 July in reaction to the FOMC highlighting concerns regarding the absence of inflationary pressures.
- This led to a perception of a potentially less hawkish Fed and therefore encouraged a further weakening of the US$ against major G10 currencies.
- Foe EURUSD, USD weakness allow for a push above a key peak from 2015 at 1.1714 and the 38.2% retracement of the 2014-17 bear move at 1.1743.
- This leaves risk for EURUSD to post further gains into August.
EURUSD – Bullish trend reinforced
A strong push higher Wednesday from above support at 1.1603, overcoming the critical 1.1714 peak and the key long-term retracement level from the 2014-17 sell-off at 1.1743, sustaining bullish pressures from last Thursday’s significant move higher through the ECB Meeting above the key May 2016 peak at 1.1616, aiming higher again for Thursday.
Moreover, mid-July positive price action has reinforced the bullish intermediate-term outlook into August.
- We see an upside bias through 1.1776 to target 1.1835 and maybe 1.1875.
- But below 1.1707 opens correction risk down to 1.1603.
Intermediate-term Outlook – Upside Risks:
- We see a positive tone with the bullish threat to 1.2000, maybe 1.2173.
What Changes This? Below 1.1311 signals a neutral tone, only shifting negative below 1.1107.
4 Hour Chart