EUR/USD: Double signal technical bullish, but caution is the order of

© O Financista.

The Euro accentuates the rebound initiated yesterday on Wednesday, confirming a return above the psychological threshold key 1.10.

Recall that the day yesterday was marked by the publication of the ISM manufacturing index in the US disappointing, which had a negative impact on the Dollar.

Profits and purchases to good account have also no doubt played a role in the rebound of the Euro, who joined yesterday a low of 1.0925, the lowest since mid-may 2017, after more than a week of sharp decline, from the peak at 1.1163, 26 August.

The improvement of the situation in Hong Kong is beneficial to the Euro-Dollar

Today, the continuation of the increase appears to be related to a decline in risk aversion, while the situation in Hong Kong may come to an end after several months of mass protests.

Carrie Lam, who control the executive power local, has indeed confirmed today that the draft extradition law to China, which had been at the origin of the popular uprising, had been abandoned.

And even if the protesters had also made other requests which have not yet received a response, we can estimate that the victory on the draft extradition act will calm the game for the moment.

This dope, therefore, the optimism of a market, both because Hong Kong is a major financial center, but also because a slippage of the situation in Hong Kong, and the intervention of the chinese army would have annihilated the hopes of seeing China and the United States to conclude a trade agreement.

In other words, a situation eased in Hong Kong is one less menace on the relationship China-USA, which is welcomed by the market with a decline in the Dollar today, as the more the prospects are good for the relations China-USA, the less likely it is that the Fed embarks on an easing cycle extended according to the investors.

The very strong rebound of the Book also helps the Euro

It should also be noted that the Euro’s rebound from yesterday is more or less synchronized with that of the Book, which is benefiting from an improved outlook for the Brexit, with an output of no agreement which is less likely than a few days before.

Thus, the GBP/USD has jumped by more than 260 pips since yesterday morning, which has benefited the EUR/USD correlation.

Pay Attention to the meeting of the ECB in the month of September

Prudence, however, will continue to put towards the purchase of the EUR/USD for the moment, because of the threat of the meeting of the ECB of 12 September.

In fact, the market expects largely that the central bank has announced a reduction in its deposit rate, and perhaps other measures of monetary policy, which is expected to weigh on the single currency.

Technical analysis EUR/USD

From a technical point of view, it can be noted, especially a double bullish signal on Wednesday, with the break above the moving average 100 hours and especially the return above the psychological threshold of major 1.10.

However, with a little hindsight, we remark that only a break above the moving average 200 hours, and above 1.1050 would confirm that the sellers no longer control the pair in the short term, and in this case, the psychological threshold of 1.11 will be the first potential goal, prior to the summit, from 26 August to 1.1163.

For the reduction, a return to below 1.10 and below the moving average 100 hours currently located at 1.0995 would negate the possibilities of continuation of the rebound for the moment, and could lead to a return to 1.0950, or even the recent low annual 1.0925.

By David Wagner

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