Daily Market Recap – EURUSD Weekly Outlook

The EURUSD is at a crossroads moving between a medium-term bullish oblique and the bearish oblique of a short-term wedge.

The EURUSD price is struggling to rebound despite being on a major medium-term bullish oblique. The pair appears to be searching for a clear direction from a technical analysis standpoint, as the euro is moving in a short-term downtrend wedge and on its bullish oblique that runs through the lows of last November and March.

The next few sessions will be crucial for the EURUSD. A continuation of the pullback below the bullish oblique would form a bearish “head and shoulders” reversal pattern, which would theoretically open the way for a return to at least $1.10.

On the other hand, a rebound on this oblique and an exit from the top of the wedge would open the way for a rebound of the euro. A return to the symbolic threshold of $1.20 would be expected in the short term.

In terms of fundamentals, the EURUSD is penalized by the uncertainties surrounding the health situation in Europe with the rapid circulation of the Delta variant. As vaccines appear to be effective against the various forms of COVID-19, Europe will need to vaccinate as many people as possible to reduce the risk of hospital overcrowding.

The EURUSD is also being hurt by the prospects of a normalization of monetary policy. Although Jerome Powell has reiterated that inflation should be transitory and that the Fed will continue to support the economic recovery, investors are concerned that soaring inflation will push FOMC officials to begin the process of policy normalization.

(Chart Source: Tradingview 18.07.2021)

Observers expect the Fed to announce in July or September a reduction in the amount of asset purchases. If this is the case at the next meeting at the end of the month, the pressure could increase on the single currency. In the near term, a pullback below the bullish oblique channel would open the door to a short move towards the 1.17 level.

Support & Resistance Levels:

R3 1.20404

R2 1.19510

R1 1.18750

S1 1.18000

S2 1.17148

S3 1.16380

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.