Markets Analysis

Fundamental Analysis

• USDJPY reaches a 34-year high, former President Trump criticizes the depreciation of the yen
• French PMI at 50.5, German PMI at 53.5, both surpass market expectations, indicating economic expansion
• US Composite PMI falls below market forecasts, leading to increased selling of USD after the announcement

EURUSD technical analysis

Analyzing the daily chart for EURUSD, let’s draw three triangles. A neckline emerges at 1.072 USD, now considered a key resistance line.

ECB President Lagarde has clearly been leaning towards rate cuts, and it’s declared that cuts are coming soon. This makes EURUSD more likely to be sold, and USD becomes more attractive as the timing of US rate cuts is delayed.

While a single indicator does not usually lead to a policy shift, the surprising nature of the figures makes EURUSD more likely to rise, especially as US PMI fell below expectations.

The focus moving forward is whether it will surpass the neckline. Price movements near the Fibonacci retracement levels are also of interest.

Day trading strategy (1 hour)

Analyzing the 1-hour chart for EURUSD, a Fibonacci retracement shows a slight decline at the 38.2% level, indicating market awareness. The neckline from the daily chart at 1.072 USD presents resistance, suggesting limited upside potential.

Considering the interest rate policies of the ECB and the Fed, a movement towards a weaker EUR and stronger USD seems likely.

Thus, the day trading strategy would be to sell on rallies. Entry at 1.072 USD, target at 1.065 USD, and stop at 1.075 USD.

Support/Resistance lines

Key support and resistance levels to consider are:

1.072 USD – Neckline

1.076 USD – Fibonacci 38.2%

Market Sentiment

EURUSD Sell: 28%, Buy: 72%

Featured Currency Pair of the Week (USDCHF)

USDCHF continues to see minor price movements. US Composite PMI falling below market expectations led to a temporary drop, but it recovered to around 0.9120 USD. The resistance line at 0.9150 USD proves difficult to surpass.

With no significant economic indicators related to Switzerland, a range-bound market with low volatility is expected to continue. It might be best to wait until the next indicator release.

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.