EURUSD: ...not very logical, but it could happen!

A few months ago, to our traders (PRIVATE ROOM), we released an interesting weekly analysis, "if the consolidation movement will be able to maintain the support around 1.09, the expected rebound could form a CR Pattern and subsequent harmonic structure" (below you can see our old charts.) This swing is logical for eurusd? Absolutely not, but we are traders, and we have to limit ourselves to follow the trend and interpret technical analysis with the help of charts. Many beginners, a bit worried about their short positions, they asked why eurusd has been bought, while the monetary policies of the two central banks (ECB and FED) are still divergent. The answer is very simple: what is not correct, is the analysis of time frames. The Central Banks' monetary policy may have effects on currency, in medium to long term (higher time frames, M, W ....), while it may not be effective in the short term.
In the long term we remain bearish, but our tactics and strategy in the medium term is still bullish.

Ours old Charts Analyzes (weekly):

SignalSwiss
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Comment:

This is our last weekly analysis published on TradingView:

Comment:

Monday's session is devoid of economic data, and traders focus is for tomorrow, when German and Eurozone Manufacturing, Services and Composite PMIs for Aug.
Although the German Manufacturing PMI in July fell slightly to 53.8, from 54.5 in June, it was the strongest expansion in the past four and a half years. In addition, output grew at the fastest pace since Apr 2014, helped by increased demand and the processing of inventories. Input costs rose for the first time in a year.
German Services PMI rose to 54.4 in July, from 53.7 in June, the 38th straight month of growth, as a result of rising demand and investments. Yet service provider confidence fell to an 8-month low, due to concerns over the consequences of Brexit.
Eurozone Manufacturing PMI fell to 52 in July, from 52.8 in June, but still recorded the 37th consecutive month of expansion. New orders and job creation grew at a low pace. Eurozone Services PMI rose to 52.9 in July, from a 17-month low of 52.8 in June. Eurozone Composite PMI rose to a 6-month high of 53.2 in July, the 37th straight month of growth, driven by accelerated output growth in Germany.
Technically speaking, On the daily chart, EURUSD has turned bullish since 27th July as the dollar weakened, breaking the upside downtrend resistance line and significant resistance level at 1.1300 on 18th Aug. Yet it has retraced today due to the rebound of the dollar. eurusd is consolidating below 1.13, WPP test. A potential WPP breakout, could trigger a pullback on the pair. In contrast, a potential MONTHLY RESISTANCE breakout, would trigger a further bullish phase that could push prices to new high.

Comment:

Comment:

The Fed Chairman Janet Yellen, will make a speech at 14:00 GMT on Friday 26th August, which will influence the market sentiment and the strength of the dollar.
Today we get a series of economic figures out of the US. Initial Jobless Claims (the week ended 19th Aug), Durable Goods Orders (MoM) for July, and Core Durable Goods Orders (MoM) for July, to be released at 12:30 GMT. Services PMI and Composite PMI, at 13:45 GMT.
Since FOMC’s dovish statement on last Wed 17th Aug, the New York Fed President Dudley, San Francisco Fed President Williams, and the Fed Vice Chairman Fischer made hawkish comments respectively. The conflicting of comments resulted in a confusion for the market and a choppy trend of the dollar. Yellen’s speech on Friday may give the market a clearer picture of the Fed’s likely measures.
The US Initial Jobless Claims fell by 4,000 to 262,000 in the week ended 12th Aug, marks the 76th straight week below 300,000, since the figure of 27th Feb 2015. Initial Jobless Claims have seen a downtrend since Apr 2009, indicating the increased strength of the US labour market.
Durable Goods Orders fell by a revised 4% in June, from a 2.2% drop in May. It was the biggest decline since Aug 2014, driven down by transportation equipment. Core Durable Goods Orders decreased by 0.5%, from a 0.3% drop in May, a second straight fall.
Services PMI rose to 51.4 in July, from the previous figure of 50.9. Composite PMI rose to 51.8 in July, from the previous figure of 51.5.

Comment:

Economic news from Europe is not much better than what we have seen in other parts of the global economy. The Eurozone manufacturing PMI weakened marginally in August, dropping to 51.8 from the 52.0 reading in July. Although the drop is not large, it reaffirms the state of economic weakness across the region. Meanwhile, Germany’s IFO business climate, current assessment and expectations indices were also lower in August than during the previous month. But perhaps the most interesting number coming from Germany was the revision to Q1 GDP components. Although the final release of Q2 GDP growth remained the same, up 0.4 percent, q-o-q, not annualized, the components for Q1 were revised significantly. Private consumption expenditures (PCE) was revised down to 0.3 percent from 0.4 percent, government expenditures were revised from an increase of 0.5 percent to an increase of 1.3 percent while capital investment was revised slightly downward to 1.7 percent from 1.8 percent. This meant that domestic demand was revised down to only 0.5 percent from an original increase of 0.8 percent. On a positive note, exports of goods and services, which were originally reported to have increased 1.0 percent, did so by 1.6 percent while imports of goods and services growth was revised down to 1.3 percent from 1.4 percent, all of them not annualized. On the other hand, growth in the U.K. economy came as expected, up 0.6 (not annualized) percent in Q2 on a sequential basis with strong personal consumption expenditures, up 0.9 percent, and strong investment, up 1.4 percent. Conversely, government expenditures were down 0.2 percent and real exports of goods and services were weak, increasing only 0.1 percent but better than the previous quarter, all compared to the previous quarter, not annualized.

Comment:

We still maintain our old view about eurusd (we are traders, not just sellers of signals!) at least till the break of the key supports. In a few minutes it will be issued the decision about interest rates, but the key point will be the press conference. We entered Long a few days ago, and after taking some profits, our tactics is to put a stop in BE and see what happens. The strategy was correct: long position with the goal of having operating margin (distance from the entry level) of our long position, target hit! Now we enjoy the show !!

Thanks for your support and trade with care!
SignalSwiss

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