From time to time we get opinions from the Trump’s administration that the strong USD is becoming a huge problem for the American companies and economy as overall. With those comments, some experts started to doubt the current interest rises path. This eases the buying pressure on the USD and creates a mid-term correction movements on many pairs.
On the EURUSD, the price defended the lower line of the wedge formation (green lines). Wedge generally suggests that the price will decline in the long-term but this defence (yellow) gives buyers hope and an occasion for the mid-term upswing. The closest target for now is 100 pips away (orange, 1.085) and looks very strong. It is a combination of the horizontal resistance and the long-term down trendline (blue). This allows us to think that this resistance will be very hard to break.
Long-term sentiment has to stay negative for a while. We are below all major resistances so we have no grounds to think that the situation is different. We can see a bullish potential in the short-term and this is our base scenario for the next few days/weeks. USD weakness should be continued but again, later on, higher prices on the EURUSD will be used by the sellers to push prices lower.
Chief Analyst – Alpari Research & Analysis Limited
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