Hello forex peeps! On today’s fx feature is the 4-hour chart of the fiber or the EURUSD pair. In my previous post about it (please see it here) last August 3, I mentioned that as long as its uptrend holds, it would continue to move higher… and it did. As you can see, the pair had consolidated into a symmetrical triangle after reaching a high of 1.3262 on August 3. It then broke out to the upside after finding support at the uptrend line. The presence of a hidden bullish divergence (where the price moves higher and the stochastics moves lower) and its oversold condition when it fell back to the uptrend support could have also led the investors to buy up the euro in exchange of the USD. Still, the pair is facing some heavy selling pressure at 1.3300. Given this, it might a harder time in moving above the mentioned level. It would more likely consolidate again or even retrace before it shoots up again. A break, however, of the uptrend line could push the EURUSD back to 1.3100. But since it is on an uptrend, a move higher is more likely to take place.
The euro’s recent jump was due to the dismal result of the US’s non-farm payrolls (NFP) report. Imagine, US firms about 131,000 jobs in Jul which was far worse than the expected 63,000 job cuts. The country’s unemployment rate, though, managed to remain at 9.5%. Nonetheless, the worse-than-projected NFP count spurred some risk aversion in the market. The difference this time though is that the euro, as mentioned, soared against the greenback. Usually, the EUR gets sold off whenever there is risk aversion in the markets since investors generally seek shelter under the safety of the USD whenever these happen. But apparently, the market is already becoming wary of the US’s recovery which in turn leads them to question the viability of the US dollar.
For the past week, I have observed that the movement of the USD has been more or less positively in line with the US’s fundamentals.Will this trend continue? We will see. If it does then any weak economic update from the US next week could push the EURUSD higher. The Fed is scheduled to release its interest rate decision on Tuesday (August 10) while the US’s inflation and retail sales numbers are due on Friday (August 13). watch out for any downbeat outlook and dovish statements by the FOMC and/or weak inflation and retail sales numbers!
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