Good morning traders.
Well we got a turnaround Tuesday of sorts yesterday – its just that it was a bit late.
After tagging 1.1180s just above the low of the year eurusd had a slight scalded cat bounce and stayed on the front foot over night. Caixin Services PMIs out of China had a hand in the rally as nearly all risk assets responded positively to strong data. Additionally sources were out talking up a positive US China trade deal as talks continue in Washington.
We also had an about turn in the Brexit situation as PM May put the cat amongst the pigeons with her own party by inviting the leader of the opposition to the table to figure a compromise way forward. Cable responded very well to this and it has eased the pressure across europe somewhat as the market takes this as a positive step in finding a less damaging economic solution. Whether this remains the case for long is still unclear however as this plot has time still to run. Nevertheless the market likes it for now and it can´t do any harm to the euro. Que sera sera :).
While the long from S2 at 1.1182 was a little late in triggering at around 5pm BST, anyone taking it would have recorded a +26 model win and if held, an even better result.
For today we have final services PMIs from across the EZ and ADP Non Farm and ISM Services PMI data from the US.
The Daily Chart
The doji candle printed yesterday looks for all intents and purposes like a key event as it gives a strong technical hint at higher prices printing where it did at a key level.
If so and the pair follows the narrative we have talked about this week i.e. a rally back up the price chart then the next levels of interest are the 1.1250 and 80 levels and then 1.13. Given the recent disinclination of the eurusd to look for higher prices I think we need to see how we fair today to test whether any rally has legs. NFP data on Friday may prove critical in this story.
The Hour Chart
Levels as per.
You can see from the chart that the 23.6 and 38.2 Fib levels correspond nicely with the 1.1250 s and 80s levels mentioned above and any rally has to navigate through these traditional rally busting resistance points as a turn at either would get traders thinking more about the down side again.
For today though all thoughts are going to be on the relative strength of eurusd as the USDx clipped 97.50, at the same time as the eurusd tagged the 1.1180s. My guess is Friday NFP will be the real tell as to whether we have a change in midterm fortunes or if we are still on course for a continuation of the range or even a lower range as we have also discussed.
I´ll be watching for any dip back to 1.12 ish as a first test of strength of conviction.
Have a good one :).