Good day forex peeps! Here’s an update on the EURUSD pair or the fiber. Last August 12 (please see my last blog here), I noted the pair’s disastrous month when it fell by more than 450 pips after reaching a new 3-month high of 1.3334 on August 6. It’s a good thing that the previous support at 1.2750 and the uptrend line. Since August 11, the pair, however, has been consolidating into what appears to be an inverted head and shoulders formation. Are we about to see a bullish reversal in the euro’s valuation? Maybe. Anyway, if the pair breaks above the neckline of the formation then it could go all the way back to 1.3300. A fall below the uptrend line, on the flip side, could push it back to 1.2750. But since the uptrend line is still intact, the pair has a higher chance of moving north.
Earlier today, Germany’s and the euro zone’s Zew economic sentiment indices for the month of August came in mixed. Germany’s index unexpectedly slipped 14.0 (versus 20.9) from 21.2, registering a new 6-month low. The broader sentiment index for the euro zone, on the other hand, surprisingly jumped to 15.8 from 10.7 (vis-a-vis 10.6). Mixed data from these two accounts caused the euro to just trade flat. And with no more data coming out of the euro zone in the horizon, the EUR could just trade in a range bound fashion for the mean time. Still, the top tier economic reports in the UK and US tomorrow could cause some volatility on the euro’s short term valuation. UK is seen to have posted another 0.4% gain in its retail sales on top of its 0.7% hike in the previous month. Initial jobless claims in the US, on the other side, for the recent week is seen to have tapered to 479,000 from 484,000. Also the US’s Philadelphia Fed manufacturing index likely reached 7.2 in August from 5.1. Watch out for these reports on August 19 at 8:30 am and 12:30 pm, respectively! Upbeat tallies from any of these accounts could bolster the demand for the non-dollar currencies like the EUR.