Good day forex friends! It’s been a long time since I last posted about FX but now I’m back! So here it is! In today’s canvas is an update of the EURUSD pair. As you can see from its daily chart, the euro has been recovering very well after it hit a low of around 1.1900 against the greenback back in June. Technically, the pair appears to have reversed already as evidenced by its breakout from an inverted head and shoulders pattern and its move past the long term downtrend line. While it is still quite possible for the EURUSD to turn south again, the chances of it moving higher, though, in my opinion, is now better than before. At present, the pair is trekking on an uptrend line. And as long as this line is left intact, the pair would most likely head higher. If it clears the 1.3000 resistance, it could aim for 1.3300. A break of the uptrend line, however, could send it back down to at least 1.2700.
Fundamentally, the expected increase in the GfK German Consumer Climate (from 3.5 to 3.6) and the probable hike in Germany’s as well as in the euro zone’s inflation figures could send the euro higher versus the greenback. Germany’s month-over-month CPI for July is seen to jump to 0.3% from 0.1% while the euro zone’s year-over-year consumer prices are also projected to rise by 1.7%, better than 1.4% logged during the previous month. The anticipated dip in Germany’s July unemployment rate (from 7.7% to 7.6%) could also send the euro higher. Given these projections plus the recent rally in the global markets, the confidence at least in the German market would have likely increased as well.