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The EUR/USD exchange rate is lower at 1.1210, meaning the currency pair's retreat from the 1.14 highs of early June are becoming a fading memory. However, analyst and technical forecaster Richard Perry of Hantec Markets says there remains the prospect of a return to recent highs.
Price action on EUR/USD over the past week has created an uncertain outlook now. The market is lacking traction in direction and the recovery trend has been broken.
The pair looks to now be forming a broadening range (around four weeks in duration now).
Support forming of recent lows $1.1165/$1.1190 coming above the old key $1.1145 breakout suggests that this is a bullish consolidation.
Momentum indicators are settling down now too, with RSI stabilising around 50 and Stochastics looking to bottom.
Taking a snapshot of recent candlestick configuration, in the past six completed sessions, there have been two strong bull candles, two strong bear candles and now latterly a couple of candles lacking conviction.
With the market rolling over a shade this morning, there is very mild negative bias forming, but the hourly chart shows support around $1.1215 initially to protect $1.1190. Whilst support at $1.1165 holds, the outlook will retain its ranging configuration.
A close below $1.1145 would be a key negative break. Resistance now initially at yesterday’s high of $1.1288.
Markets: A Questionable Recovery
Major markets are giving mixed signals over the outlook for risk appetite. After threatening to turn corrective in the past week, Wall Street equities staged an impressive rally yesterday.
However, with Treasury yields still struggling around one month lows, and the US dollar finding support (helped by impressive housing data), the sustainability of renewed buying on Wall Street could be questionable.
There is still a dark cloud of faltering progress in the economic re-opening. Fed chair Powell believes that the US is into an important new phase sooner than expected, but when the WHO suggests the pandemic is actually speeding up globally, this is likely to drive continued caution amongst traders and investors.
The dollar is regaining lost ground across the major currencies today and this is just beginning to weigh on equities slightly once more.
This is also lending a consolidation to the breakout on gold and dragging on oil.
Whilst yesterday was a good start to the week for risk appetite, it would appear that today is beginning to see markets swing back the other way.
It will be interesting to see what the impact on US Consumer Confidence levels are after the easing of lockdown restrictions have been phased back recently.