The early price action suggests the direction of the EUR/USD on Friday is likely to be determined by trader reaction to the pivot at 1.1719.
The Euro is hovering slightly below a one-week high on Friday as investors moved back into the U.S. Dollar amid renewed concerns over the finances of property developer China Evergrande Group.
Today’s move follows a strong rebound rally by the common currency on Thursday that was fueled as the safe-haven dollar fell after Beijing injected new cash into the financial system, when Evergrande announced it would make interest payments on an onshore bond.
However, investors initiated a new round of safe-haven buying after some holders of its offshore bonds said they had not received coupon payments by a Thursday deadline. Traders also expressed concerns over additional dollar bond interest payments due next week.
At 11:09 GMT, the EUR/USD is trading 1.1734, down 0.0006 or -0.05%.
The main trend is down according to the daily swing chart. A trade through 1.1755 will change the main trend to up. A move through 1.1683 will signal a resumption of the downtrend.
The minor range is 1.1755 to 1.1683. The EUR/USD is currently holding slightly above it pivot at 1.1719, making it new support.
The short-term range is 1.1664 to 1.1909. Its retracement zone at 1.1758 to 1.1787 is potential resistance.
The early price action suggests the direction of the EUR/USD on Friday is likely to be determined by trader reaction to the pivot at 1.1719.
A sustained move over 1.1719 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 1.1755 – 1.1758. Overtaking this area could extend the rally into 1.1787.
A sustained move under 1.1719 will signal the presence of sellers. This could trigger an acceleration to the downside with 1.1683 a potential target, followed by the August 20 main bottom at 1.1664.
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James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.