EURUSD grows after unsuccessful parity test :: InvestMacro


by RoboForex Analysis section

EUR/USD is rising steadily and has already reached 1.0138. After testing 1.0000 for several trading sessions, the pair has reversed upwards after all.

Investors are now turning their attention to the European Central Bank’s interest rate decision. There is no doubt that the rate will rise by at least 25 basis points in July, but there are opinions and expectations that the regulator may be more aggressive and announce a 50 basis point rate hike in September. These factors strongly favor the bulls. Well, even the July rally will be the first since 2011.

However, this decision may not be enough to reverse the trend of the pair and push it higher, because the US Federal Reserve is also behaving very aggressively and many investors use the “dollar” as a “safe” asset. A drop in the European currency is causing trouble for the European Central Bank and may lead to an increase in inflation, which is already well above the target level. Moves to strengthen the Euro are now highly questionable. This is why the current move may just be a correction before the major currency pair resumes the downtrend. Overall target may be on the downside at 0.9000.

On the four-hour chart, after completing the third descending wave at 0.9955, the EUR/USD is correcting upwards to test 1.0220 from below. Later, the pair is expected to resume trading lower, with the target at 0.9835. From a technical point of view, this scenario is confirmed by the MACD Oscillator: its signal line is growing towards zero. In the future, it may bounce from this level and resume the decline to update the bottoms.



As we see in the chart H1, after it ended the descending wave at 0.9855, forming a new consolidation range above this level, and then broke it to the upside, the EUR / USD reached 1.0081; At the moment, it is forming another consolidation range around the last level and may break it higher later to extend this structure up to 1.0220. After that, the instrument may resume trading in a downtrend. From a technical point of view, this idea is confirmed by the Stochastic Oscillator: after breaking 50 upwards, its signal line moves above 80. In the future, the line may decline to rebound from 50 and resume the rise to return to 80.

disclaimer

Any expectations herein are based on the author’s own opinion. This analysis may not be treated as trading advice. RoboForex assumes no responsibility for trading results based on Trading recommendations and reviews contained here.


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