Economic Data
Recent positive data from the Eurozone, such as higher-than-expected GDP growth and industrial production, have supported the Euro but this is not very evident on the chart because at the same time the Dollar has many factors contributing to its strength too.
Recent US inflation data showing a cooling trend has led to speculation about interest rate cuts by the Federal Reserve later this year.
Strong US economic data, like the employment figures and durable goods orders, could reduce the probability of near-term rate cuts, supporting the USD and pressuring the Euro. This could send prices back down to the yearly support level which we will take a look at below.
Technical Analysis
Support and Resistance Zones:
- Resistance Zone: The resistance zone is between 1.10265 and 1.11500. This area has been tested multiple times and has acted as a strong barrier to upward movement.
- Support Zone: The support zone is at 1.06305. This area has provided a solid floor for prices, with multiple bounces observed over the past year. Bulls can accumulate positions with a relatively high probability of success in this area.
Trade Opportunities
Short Position
Given that the price is approaching the resistance zone, there is a high-probability trade setup for a short position, but not yet; we still need to see the price move into the resistance zone, reject, and wait for a strong bearish candle to enter a short. The alternative option is to slowly accumulate shorts with a stop above the high, around $1.13.
Targets could be set at the mid-level of the consolidation zone, around $1.0836, and then a larger target at the support level mentioned above. Keep in mind this would likely be a trade with a holding time of roughly two months. If trading futures at the OneUp Trader funded trader program, you will need to close the position at the end of each session and reopen it the following day.
