Market Analysis

EURUSD: Up In The Cloud

From a technical perspective, it’s almost irrelevant if it was Fed Chief Jerome Powell’s comments at Jackson Hole on Friday, Monday’s above forecast German business climate data for August from Germany’s Ifo economic institute, Monday’s heralding by President Trump of a new US-Mexico trade deal or some combination of all three but the reality is that, even in the Bank Holiday absence of many market participants in London yesterday, the euro/dollar (EURUSD) made material gains on the topside. Analysts at IFR had already noted that last Friday’s close at 1.1621, above the 55-day moving average (now) at 1.1615, could prove a bullish indicator for the euro though noting that the base of the daily ichimoku cloud was at 1.1658. Yet a subsequent spike in the New York session saw EURUSD cleanly trade through that level into an ichimoku cloud whose current top is 1.1752.  Euro bulls may now see that as an obvious target for the euro to test though other analysts have noted the 100-day moving average at 1.1761 and others suggested 1.1780 as possible objectives. Of course that presupposes that EURUSD first of all breaks above 1.1700 (which held in the Far East session on Tuesday, with IFR recording a high in Tokyo of 1.1697). Anotherissue for traders who might be returning to the market after the English Bank Holiday is whether Monday’s move was helped along in spite of the absence of some liquidity in London or because of it. At the very least though, euro bulls could argue that the levels (mentioned above) that had previously been as resistance points, namely the 55-day moving average and the base of the daily ichimoku cloud, should now become supports.

by Neal Kimberley, External Currency Analyst.