EURUSD has been dropping since late April, yet the party is only getting started for Dollar bulls. They will be waiting at the 38.2 Fib retracement (1.2050) to sell again:
But Euro bulls still see an unbroken uptrend on a longer-time frame chart. Their 38.2 Fib retracement (1.18) has held support:
Fundamentally nothing has changed in the American economy to warrant the Dollar’s resurgence. Just like last year 2017, the economy is good-not-great, and the Fed keeps promising rate hikes. It is likely the dovishness of the ECB and lukewarm economic figures that has made the Dollar comparatively stronger to the Euro (and many other currencies).
To determine my personal EURUSD bias I look to the stock markets for guidance. The Standard and Poor’s has done well lately. But technically the market may be range-bound:
The Dax in a clear uptrend:
This suggests that investors are more optimistic about the future of the European economy. Capital is flowing from the U.S. to Europe, and the EURUSD will reflect this. Therefore I am a long-term EURUSD bull, and believe the recent Dollar surge is just a retracement of long term rise in the EURUSD. But in the short run I think more of the 2017 premium attributed to the Euro must be lost, because many investors bought it expecting Draghi to be forced to raise rates in 2018.
Here are the nearby monthly and weekly sell, buy and take profit zones:
I forsee one of the following two scenarios playing out this week:
Euro buyers will stay out of the market until price sinks to aroudn 1.19. Price will then reach around 1.2050, a key Fibonacci level that dollar bulls will sell.
My plan is to buy around 1.19 with a lower time-frame reversal pattern. If price reaches 1.2050 I will take profit. I will then sell, with 1.19 as the profit target.
Fueled by Euro bulls’ momentum from last Friday, price will head straight for 1.2050. Dollar bulls will jump in causing a quick reversal.
My plan is to sell at 1.2050 and take profit at 1.19 .
(End of post)