EUR/USD prepares to start from weekly R1
- Contrary to expectations, an announcement of the US Manufacturing PMI caused only an eight basis points market reaction.
- Thus, due to absence of any sizable fundamental events, the currency exchange rate spent previous trading session in a flat and steady movement along the weekly R1 at 1.1815, crossing it multiple times in both directions.
- Today the pair is expected to use an upside momentum provided by the approaching 55-hour SMA in conjunction with the lower support line of a rising wedge and try to climb to the weekly R1 located at the 1.1878 level.
- A number of technical indicators support this scenario, sending signals to buy the pair.
- On the other hand, SWFX traders continue to remain bearish on the pair even though not as strong as yesterday.
Despite the 23-pip depreciation of the Euro, the pair did not fall beyond the 55-hour SMA near 1.1828, as it was additionally protected by the lower support line of a rising wedge.
Hence, in first half of Thursday, the currency rate is expected to resume the surge towards the above weekly R2.
However, then two scenarios might happen. Either the pair will bounce off from it and, thus, repeat yesterday’s scenario, or it will succeed to break to the top and, thus, continue to gradually move within the active pattern.
The second scenario seems more realistic, especially taking into account that the rate continues to move along the above 55-hour SMA.