EUR/USD Holds Off Key Trendline Support As Bulls Gain Strength

EUR/USD Holds Off Key Trendline Support As Bulls Gain Strength

Euro (EUR) extended upside movement against the US Dollar (USD) on Friday, increasing the price of EURUSD to more than 1.1100 and holding off a key trend line support as bulls gain strength. The technical bias remains bearish because of a Lower Low in the recent downside move.

Technical Analysis

As of this writing, the pair is being traded near 1.1142. A hurdle may be noted around 1.1150, a major horizontal resistance area ahead of 1.1216, another major horizontal resistance level and then 1.1428, the swing high of the last major upside rally as demonstrated in the following daily chart.

On the downside, the pair is likely to find a support around 1.1050, the trend line support ahead of 1.1013-1.1000, the confluence of horizontal support as well as psychological number and then 1.0911, the swing low of the last major downside move. A break and daily closing below the trend line support will trigger a renewed selling pressure, validating a move towards the 1.0821 support area. The technical bias will remain bearish as long as the 1.1428 resistance area is intact.

US Jobless Claims

The number of Americans filing for unemployment benefits unexpectedly held at lower levels last week, pointing to further momentum in the labor market after job growth surged in June. Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 254,000 for the week ended July 9, the Labor Department said on Thursday. Claims are near the 43-year low of 248,000 touched in mid-April. Economists polled by Reuters had forecast initial claims rising to 265,000 in the latest week. Claims have now been below 300,000, a threshold associated with a healthy labor market, for 71 consecutive weeks, the longest stretch since 1973.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair on rallies around above the mentioned resistance levels appears to be a good strategy in short to medium term.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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