Morning outlook - EUR/USD breaks above 1.2000
- The common European currency is continuing to advance against the US Dollar, using an upside momentum that was provided by the Jackson Hole Symposium. In result of the previous trading session, the currency rate has entered into a small ascending channel, which helped the pair to surge to the 1.2000 level.
- The further surge was expected to be restrained either by the weekly R1, or by the monthly R1 at 1.2021. However, the exchange rate managed to bypass these combined resistance level. As a result, now it has practically no barriers on its way up until the upper boundary of a medium-term ascending channel. The opposite side, in contrast, is protected by the 55-hour SMA and a bunch of other technical indicators. In this sense, the further advance seems quite possible at least until the 1.2076 level.
- However, there is also a need to take into account an impact on the value of buck after release of information on the US CB Consumer Confidence at 14:00 GMT, which is expected to plunge to 120.9, compared to the 121.1 last month.
In line with expectations, the currency exchange rate has successfully crossed a combination of the weekly and monthly R1 near 1.2010 and then made a rebound. The only nuance was that a rebound happened a little bit higher, from the weekly R2 at 1.2976 and continued until the 55-hour SMA.
Today, two scenarios are likely to happen. In first, the currency pair might try to repeat previous day’s advance. In second, it will manage slip to the bottom and gradually continue the fall until the 100-hour SMA.
It is quite possible that bears will play in favour of the buck in anticipation of release of data on the US Non-Farm Employment Change and Preliminary GDP later this day, which both are expected to show positive changes in the US economy.