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With no major catalysts directly ahead, the momentum higher in EUR/USD is one to watch for potential short-term pips.

Before moving on, ICYMI, today’s “The Week Ahead in FX” spotted swing setups in AUD/USD, AUD/JPY & USD/CAD. be sure to check that out!

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 12889.92 +0.40%
FTSE: 6123.38 -0.01%
S&P 500: 3232.94 +0.54%
DJIA: 26589.45 +0.45%
US 10-YR: 0.584% -0.005
Bund 10-YR: -0.489% -0.045
UK 10-YR: 0.114% -0.03
JPN 10-YR: 0.019% +0.003
Oil: 40.63 -1.60%
Gold: 1,936.90 +2.07%
Bitcoin: 10,367.46 +4.48%
Ethereum: 315.59 +1.25%

Fresh Market Headlines & Economic Data:

Gold hits record, equities edge higher on stimulus hopes

U.S. Durable Goods Orders Extend Substantial Rebound In June

Texas factory activity continued to expand in July following a record contraction in the spring

EU’s Barnier confident deal with Brexit Britain is possible

German Ifo Index: 90.5 points in July vs. upwardly revised 86.3 points in June

French jobless total drops in June: labour ministry

Helped by fiscal boost, German economy seen rebounding: Bundesbank

Bank of Japan Core CPI: +0.1% m/m in June vs. 0.0% in May

Pandemic hit to Japan’s first-quarter business spending worse than first thought

Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:

Japan Services PPI at 11:50 pm GMT

What to Watch: EUR/USD

EUR/USD 1-Hour Forex Chart
EUR/USD 1-Hour Forex Chart

Looking ahead, it looks like we don’t have any major catalysts on the forex calendar to shake up volatility and directional bias in currencies, so we’re checking out this strong trend in EUR/USD to catch some potential short-term, or even medium-term, pips.

On the one hour chart above, we can see a clear-as-day trend higher, likely driven by broad U.S. dollar weakness (massive stimulus measures, geopolitical fears, and rising COVID-19) cases, while the euro seems to have benefited from the deal reached on the EU recovery fund last week and improving economic sentiment in the eurozone.

So, the odds are highly in favor of the bulls at the moment, but after a 135 pips rally on the session (much more than the daily ATR of around 90 pips) and testing the next psychological level of 1.1800, today’s move might be over done.  A pullback may be ahead, which means jumping into a long position for a day trade or swing trade at better prices seems like a possibility.

For the more aggressive traders out there, look to scale into a long position on a slight pullback (or even at market) down to the 1.1750 – 1.1690 level. That’s where we may begin to see buying support if the current market drivers do not change. For the less aggressive, look for a pullback to those areas before building a short position.

For the bears on EUR/USD, there’s really no argument that could be made at the moment for a short position. Even when risk aversion sentiment flares up, we don’t see any rush to the Greenback at the moment. It’ll likely take some massive news/shock to turn it around for USD, and if we see that, then a break below the rising lows is the pattern to watch before considering a short position.