Geopolitics and the Fed to Drive The EUR/USD

EUR/USD Analysis 16 July 2018

Spot Price: 1.1682

Support - 1.1637, 1.1600, 1.1528

Resistance - 1.1700, 1.1792, 1.1800

Trade Ideas - The EUR/USD Gets Hit

  • Position: Short
  • Entry Point: 1.1750
  • Stop Loss: 1.1900
  • Take Profit: 1.1500

The EUR/USD is struggling to get above 1.1700. If we spike through it I would like to be short at 1.1750 with a stop loss at 1.1900 and a profit target of 1.1500.

2018-07-16-eurusd-trade-ideas

EUR/USD 240 min Chart - EUR/USD is Weak

Politics, the Fed and Data

We have a number of different factors that are going to drive the EUR/USD, coming for all areas of the economy and politics.

On Monday we have a summit between the US and Russia in Finland. While we expect little to come from the event, there is a chance that a positive outcome will boost the USD. Which has been under pressure in recent times on the back of the trade war sagas and geopolitics in general.

While later in the week, US Federal Reserve Chairman Jerome Powell will be appearing in front of congress, to testify. Again I don’t expect any real developments here as while it is a major event, Powell is new to the job and the Fed has been very open with their monetary policy. And that is helped by the fact that the US economy has been strong recently.

While on the EUR data front, we will need to watch out for Eurozone CPI. Which is expected to come in at 2%. That’s a great result for the Eurozone who has been struggling with low inflation for more than five years.

Key Economic Data

Arguably the most important data point this week is in fact US retail sales. I say that because last month we saw a really strong outperformance which crashed the EUR/USD and really lifted the Greenback. The result came in at 0.8% which was more than double the expected 0.4% result.

This month we are also looking at 0.4% month-on-month growth, but as we have now seen, a strong result can rally shakeup the EUR/USD.

Technical Levels

The EUR/USD is currently struggling to lift above the 1.1700 mark. We have strong resistance both at 1.1700 and 1.1800 which is going to make it quite hard to get much traction. There is a chance of a spike higher which I feel is a good entry point as it will likely retrace.

If price breaks below 1.1500 then we are looking at a big sell-off. We’ll need a strong USD for that to happen and it is currently topping out on the US Dollar Index.

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EUR/USD - Key Levels

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