Hold longs with a target at 1.1285 and stop loss at 1.116
Long on bullish reversal above 1.1124
Profit Targets: 1.1288
Stop Loss: 1.1124
Long term traders should buy close to 1.1124 with a stop of 1.1083 and targets at 1.14 and 1.16.
Last Week’s Action
Activity across all major forex markets dropped off last week. The EUR/USD pair remains stuck in a tight range between 1.112 and 1.298, and for last week even remained below 1.12. Once again, the USD had a mixed showing against all the major crosses.
Friday’s Eurozone PMI data was a little weaker and failed to inspire either Euro or USD bulls. However, the data wasn’t weak enough to derail the longer-term forecasts for improving conditions in Europe.
In the US, there were no big surprises, but data continues to be on the weaker side of neutral. That means the data and the Fed’s rhetoric are still diverging, and at some point, either the data must improve or the Fed must change its position.
Where to Now?
This week may also be very quiet with no market moving data expected, though in 2017 we never know what political or geopolitical news may hit the wires.
Today’s US durable goods orders may reinforce the USD bears stance if they are weaker than expected. Both Fed Chair Janet Yellen and ECB chair Mario Draghi will be speaking early in the week and may set the tone for the rest of the week. Later in the week, US GDP and employment data will be the main drivers for the USD.
No Change to the Long-Term Picture
The bull flag formation has now entered its sixth week and is as firmly entrenched as ever. Market activity has also tapered off as summer begins. This is more likely to result in false break than anything else. With a bull flag probabilities always favour a break to the upside, so bullish bias is favoured. The best opportunity to come out of this formation may be a false break to the downside.
EUR/USD Weekly Chart – The bull flag enters its 6th week
Time for Another Test of the Top of the Range
The Euro drifted in the lower half of the range last week. With no convincing attempt at a downside break, the next move may well be back to to the top of the range around 1.13. If the Euro fails to break above the midpoint of the range, traders may want to look for a false break below 1.1124.
EUR/USD 4-Hour Chart – Another test of the top of the range is due
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