EURUSD at a Technical Turning Point, US Long-term Yields Decline【June 4, 2024】

June 04, 2024

Markets Analysis

Fundamental Analysis

  • US long-term yields are declining, leading to increased USD selling in the forex market.
  • The US ISM showed weak results, and USDJPY temporarily hit 155 JPY.
  • OPEC+ announced a plan to reduce its production cut policy for the second half of the year, leading to a significant drop in oil prices.

EURUSD technical analysis

Analyzing the daily chart of EURUSD, it rebounded from the descending trend line and continued to rise for four consecutive days. Yesterday, it broke above the recent high and entered the 1.09 USD range. The background to this rise is the USD selling due to the decline in US long-term yields. The weak ISM statistics raised expectations of a rate cut. US long-term yields were sold off, and USD selling intensified in the forex market.

It broke above the high of 1.0895 USD on May 16 and entered the 1.09 USD range. According to Dow Theory, an upward trend has occurred. The next target price range is expected to be around 1.0950 USD. It seems that it will take time to break through the price range where the monthly resistance line and past highs are concentrated.

However, it can be said that the trend has shifted from a downward trend to an upward trend, reaching a technical turning point.


Day trading strategy (1 hour)

Analyzing the 1-hour chart of EURUSD, it rose significantly due to USD selling triggered by the decline in US long-term yields. The strong upward momentum is evident even after breaking above the recent high. Drawing the Fibonacci channel, it is approaching the 38.2% line. Additionally, the RSI has reached 70, indicating a slightly overbought level on the 1-hour chart.

Checking market sentiment, 87% are in short positions, suggesting heavy upward resistance. A correction movement is likely to occur.

For day trading, consider buying on dips. The ECB’s rate cut is already priced in, and a significant reaction is unlikely. Instead, the impact of increased USD selling due to heightened expectations of a US rate cut is expected to be greater.

Entry at 1.0885 USD, target around 1.0935 USD, with a stop at 1.0850 USD.

Support/Resistance lines

The following support and resistance lines should be considered moving forward.

1.0947 USD – Past high / Monthly resistance line


Market Sentiment

EURUSD – Sell: 84%, Buy: 17%

Featured Currency Pair of the Week (NZDCAD)

NZDCAD continues to rise. The significant drop in oil prices has strengthened the selling of CAD. The CAD is a commodity currency and highly correlated with oil. The OPEC+ meeting indicated a reduction in the production cut policy from the latter half of the year. Despite a decrease in demand, the outlook for increased supply has led to selling pressure on oil prices.

NZDCAD broke through the resistance line of 0.84 CAD and is aiming for 0.85 CAD. As explained in the video, the Bank of Canada’s policy rate announcement is a key indicator. Until then, the CAD selling trend is likely to continue, with a potential attempt at 0.85 CAD.

Today’s important economic indicators

Economic indicators and eventsJapan time
Australian Retail Sales10:30
Swiss Consumer Price Index15:30
German Unemployment Rate16:55
US JOLT Job Openings23:00

*Trading advice in this article is not provided by Milton Markets, but by Shu Fujiyasu Jr., a certified technical analyst.

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