EUR/USD: FALLING WEDGE SUGGESTS POTENTIAL UPSIDE TO COME
EUR/USD has a rather wavy feel to it, rising and falling in succession as the US and Europe continue to target inflation. However, while the US is seeing positive signs on the part of the economy, Europe appears to be heading in the opposite direction – making sustained rate hikes a much harder sell.
Germany is in a technical recession, even if only just, and manufacturing data drags the rest of Europe lower with it. ECB officials are hoping that reduced economic activity can help bring down core inflation, easing the pressure on the Governing Council to keep hiking into weakness. If markets smell blood in the water, they are likely to hold back on ambitious rate hike expectations, which could see a weaker euro as a result.
The falling wedge suggests the euro hasn’t thrown in the towel and could still see an upside breakout. Levels to watch from here include: the downward sloping trendline resistance and the 1.0910 level which coincides with the April 2023 swing low. Given that the Fed remains of the opinion rates have further to rise, an opinion also held by the ECB, a discernable lack of direction could continue to plague the pair. A bullish impulse would need to breach 1.0965 on the way to 1.1012 for validity, while downside scenarios would need to take into account trendline support and a move below 1.0760 with a daily hold.
EURUSD BUY LIMIT 1.0840 - 1.0850💯💯
✅ TP1: 1.0880
✅ TP2: 1.0910
🛑 SL: 1.0810
Germany is in a technical recession, even if only just, and manufacturing data drags the rest of Europe lower with it. ECB officials are hoping that reduced economic activity can help bring down core inflation, easing the pressure on the Governing Council to keep hiking into weakness. If markets smell blood in the water, they are likely to hold back on ambitious rate hike expectations, which could see a weaker euro as a result.
The falling wedge suggests the euro hasn’t thrown in the towel and could still see an upside breakout. Levels to watch from here include: the downward sloping trendline resistance and the 1.0910 level which coincides with the April 2023 swing low. Given that the Fed remains of the opinion rates have further to rise, an opinion also held by the ECB, a discernable lack of direction could continue to plague the pair. A bullish impulse would need to breach 1.0965 on the way to 1.1012 for validity, while downside scenarios would need to take into account trendline support and a move below 1.0760 with a daily hold.
EURUSD BUY LIMIT 1.0840 - 1.0850💯💯✅ TP1: 1.0880
✅ TP2: 1.0910
🛑 SL: 1.0810
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