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EURUSD: pair technically ready for a drop to 1.16

Previous:

On Tuesday the 3rd of July, trading on the euro closed slightly up. The single currency recovered to 1.1673 at the opening of the European session before the market entered a correctional phase. Positive US data gave the dollar some respite. The number of factory orders exceeded expectations and posted an increase on last month’s value.

With US Independence Day approaching, trader activity on the market was relatively low.

US data:

Factory orders (Jun): 0.4% (forecast: 0.1%, previous reading revised from -0.3% to -0.4%).

Day’s news (GMT 3):

  • 10:15 Spain: Markit services PMI (Jun).
  • 10:45 Italy: Markit services PMI (Jun).
  • 10:50 France: Markit services PMI (Jun).
  • 10:55 Germany: Markit services PMI (Jun).
  • 11:00 Eurozone: Markit services PMI (Jun).
  • 11:30 UK Markit services PMI (Jun).
  • 24h USA: Independence Day.

Fig 1. EURUSD hourly chart. Source: TradingView

Current situation:

Tuesday’s target was not reached. The pair went into a correctional phase above the balance line. The euro rose to 1.1679 in Wednesday’s Asian session. From there, it dropped to 1.1660 before returning to its current level of 1.1673.

There’s a strong resistance level in the works at 1.1680. Various lines from different highs intersect at this point. If buyers manage to break this level, they should continue as far as 1.1700. In my forecast, I expect the euro to decline throughout the European session, closing at 1.1600.

Today is a national holiday in the US as the country celebrates its independence. Trader attention will be turned towards the Markit services PMI data for European countries. The most influential of these will be the British.

A fresh wave of US data is set to be released towards the end of the week. The minutes of the FOMC’s latest meeting will be published on Thursday, while the Nonfarm Payrolls report for June will be released on Friday. In addition, Friday is when US tariffs on a number of Chinese goods will come into effect.


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