A positive bias returns to EURUSD and EURCHF
Tony Sycamore September 11, 2020 11:50 AM
After waving the bullish EURUSD flag since May and in the process earning the title of a EURUSD cheerleader from the anchors of Ausbiz TV, a very good reason was required to jump off the bullish EURUSD bandwagon, no matter how briefly.
Last week in an article here we made the jump and called for a deeper pullback in the EURUSD after it completed a textbook daily reversal candle from the 1.2000 resistance zone that coincided with a comment from the ECB’s Chief Economist noting that while the ECB does not target FX rates the “euro dollar rate matters.”
Our target for the EURUSD pullback was “uptrend support and recent lows 1.1720 area, which will be looked at as a possible buying opportunity.” The EURUSD tagged the uptrend support six days later, which by that time had risen to ~1.1750 and from where a recovery commenced.
The recovery extended overnight following the ECB meeting in which President Lagarde voiced no concerns above the level of the EURUSD and both the core outlook for inflation and the 2020 GDP forecast was revised higher. The EURUSD’s gains were later paired after a sell-off in equities and more Brexit uncertainty.
Nevertheless, with the tailwind of the EU Recovery Fund still to come, providing the EURUSD remains above uptrend support 1.1750 on a closing basis, the bias is for the EURUSD to continue to rally towards trendline resistance 1.2050 before eventually breaking higher towards 1.2550.
Another EURO pair worth closer examination from a buyer's perspective is EURCHF. The pullback from the September 1st 1.0877 high, appears corrective and is closing in on the “abc” wave equality support target at 1.0729 as well as the cluster of horizontal support 1.0730/10.
As such, we favour buying EURCHF on dips towards the 1.0750/30 support region, leaving room to add to longs if a bullish daily reversal candle emerges from this support zone. The stop loss should be placed at 1.0699 and the initial target is a retest of 1.0877 before 1.1050.
Source Tradingview. The figures stated areas of the 11th of September 2020. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
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