Fundamental Analysis

• Japan’s GDP was unexpectedly downgraded, leading to a retreat in interest rate hike expectations and a weaker yen.
• Caution is building ahead of the US CPI release and the presidential candidate debate.

EUDUSD technical analysis

Analyzing the daily chart of EURUSD. The pair was engaged in a battle around the 28-day moving average but formed a bearish engulfing pattern and declined, marking a retracement high. With mixed results from US economic indicators and a view that conditions are not too negative, the USD is being bought.

The 38.2% retracement level is around 1.0996 USD. The recent low at 1.1026 USD is crucial; a break below this level would signal the start of a downtrend. However, the 1.10 USD level is likely to act as significant support. Given its status as a round number, as well as aligning with Fibonacci retracement and Pivot S2, it will be challenging to break it in a single move. There are many factors suggesting a potential rebound.

Focus today should be on whether EURUSD breaks below 1.1026 USD.

Day trading strategy (1 hour)

Analyzing the hourly chart of EURUSD. The pair is in a downtrend and approaching the recent low of 1.1026 USD. A natural expectation would be a decline toward the 38.2% level. The MACD histogram is also decreasing, suggesting a downtrend.

However, it is difficult to break 1.10 USD easily. A rebound is anticipated today.

The day trading strategy is to expect a rebound from 1.10 USD, placing a buy limit order. Set a buy limit at 1.0995 USD, with a target exit around 1.1035 USD. If the price drops to 1.0945 USD, set a stop loss.

Support/Resistance lines

Support and resistance lines to consider are as follows:

1.10 USD – Round Number / Fibonacci / Pivot S2

Market Sentiment

EURUSD: Sell 44% Buy 56%

Today’s important economic indicators

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