- Golden Crossover suggests buying opportunity in EURUSD
- A close above 1.1500 indicates a new wave higher towards 1.17 and 1.20.
- Charts likes EUR against CHF, GBP, and USD.
It’s hard to believe that we are at the end of June, with everything 2020 has thrown at all of us! We sincerely hope you have all come through ok so far.
As we are heading to the second half of the year, let me welcome all the euro bulls with a positive approach. It occurs when a short-term moving average cross over a long-term moving average on the higher side, i.e., 50 and 200. Targets for our long EURCHF, long EURGBP, and long EURUSD trades were revised marginally upwards due to the new EU momentum. Interestingly death crossover spotted on EURAUD last Friday, which is a bearish factor.
Nine EUR crosses are witnessing Golden Cross. Interestingly all these crosses have seen a significant up move in the first half of 2020, barring EURUSD. We Expect EURJPY and EURCHF could follow the EURUSD footsteps in 2H 2020.
- EURGBP: Trading at 0.9140, 50-MA: 0.8900 and 200-MA: 0.8800. Since April low, the price has rallied more than 5%. And in the 1H 2020, the cross surged 8%.
- EURAUD: Trading at 1.6360, 50-MA: 1.6560 and 200-MA: 1.6600. The price is trading below the death Crossover. In the near-term, any bounce back could cap the price between 1.6600 and 1.6800.
- EURUSD: Trading at 1.1240 50-MA: 1.1050 and 200-MA: 1.1070. The price has been trading in a wide range of 1.0600 and 1.1500 levels since March.
Recovery: France and Germany’s 500 billion-euro fund and the ECB substantially lifting the size of pandemic Q.E. are the critical drivers to euro currency since May. We count these mega bullish factors in the coming months. Overnight Euro risk assets were mixed. Last week the European policymakers failed to reach the recovery fund’s agreement. We expect the deal will seal in July as the policymakers meet again. So, July is the critical month for the EUR. We forecasted a target of 1.17 in the medium term, and we are confident about Europe’s recovery.
Data review: Recent sentiment survey has brightened further, and German business sees the light at the end of the tunnel, according to ifo Institute. And the recent PMI survey findings
The ifo Business Climate Index rose from 79.7 points in May to 86.2 points in June. This is the strongest increase ever record, according to the official report.
The other consumer expectation survey suggests Economic outlook is improving. GfK has forecast a figure of -9.6 points for July 2020, 9 points higher than its level in June of this year.
“The faint light at the end of the tunnel, which was already apparent last month, is apparently getting somewhat brighter,” explains Rolf Bürkl, GfK consumer expert.
IHS Markit’s Composite PMIs recorded for June 2020:
- France: 51.3 versus 32.1 in May
- Germany: 45.8 versus 32.3 in May
- Eurozone: 47.5 versus 31.9 in May
Data preview: This week ahead, we will see June CPI (Tue), European Manufacturing PMIs (Wed), and EZ Services PMI (Fri). Recent flash PMI surveys printed above expectations suggest silver lining is behind. Besides, the US unemployment report due on Friday.
The major was quiet during today’s Asian session with no important moves. The pair managed to keep Friday’s gains on Monday and is not trading above 1.1200. Looking ahead, the end of the month and the second quarter and the first half of 2020 could print some shaky moves today.
The story in a Chart
Last week, EURUSD added only 40 pips (0.05%) to close at 1.1218. After a recent surge, the market seems to be taking a pause before the next leg up. Traders would keep an eye on global pandemic news and the data point which supports EA recovery. Technically, EURSUD has to continue to hold 1.1000 levels to get the stability to witness an up move towards early June high of 1.1500 while on the downside support exists at 1.1160 double bottom and 1.1000 levels its 100MA.
We still believe the upside movement towards 1.1700 in the coming days is highly likely. However, a decisive break out of the 1.1500 is needed. Buy on dip strategy should be continued till market trades above 100 DMA.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
What is your Technical View?
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