Based on the early action of the price and the current price at the level of 1.1153, the direction of EUR/USD movement to the rest of the session will probably be determined by the trader’s reaction to the short-term 50% level of 1.1155. External markets will have a great impact on EUR/USD in the near future, especially on the Japanese yen. Do not be surprised by the intervention of the Bank of Japan. Also on the table there may be a response from the US against China, which will allow the yuan to fall below 7.
Lower Treasury yield and loss of high-yielding assets, such as the U.S. dollar, contribute to the growth of the euro on Monday. Traders are reacting to the news that China allowed its renminbi to weaken below 7 yuans per dollar, which is an 11-year low and indicates an escalation of tensions between the United States and China.
At 10:19 GMT, the EUR/USD pair trades at 1.1153, 0.0046 or +0.42%.
Increased volatility is likely to be a topic for today, especially if the Bank of Japan decides to intervene to lower the exchange rate of the JPY. The Trump administration may also accuse China of currency manipulation and then try to weaken the US dollar in retaliation for this move. This may lead to a rise of the Euro.
Daily technical analysis
The main trend – down the daily chart of fluctuations, however, since the formation of the bottom of the closing price reversal on August 1 at 1.1027, the trend dynamics was higher.
Trading through 1.1282 will change the main trend to an uptrend. The movement through 1.1027 will negate the bottom of the closing price reversal and will signal the resumption of the downtrend.
The short-term range is from 1.1282 to 1.1027. Its correction zone at 1.1155-1115 is the first growth target. Since the main trend is the decline, sellers may come to the first test in this area.
The main assortment is from 1.1413 to 1.1027. If buyers remove 1.1185, then look for the possibility of expanding the rally to the correction zone at 1.1220 – 1.1265.
Daily technical forecast
Based on the early action of the price and the current price at the level of 1.1153, the direction of EUR/USD movement to the rest of the session will probably be determined by the trader’s reaction to the short-term 50% level of 1.1155.
Bull scenario
A stable movement above 1.1155 will indicate the presence of buyers. The next target is the angle of the decline of the Gann at 1.1172. Then follows the Fibonacci level at 1.1185.
The fiber level at 1.1185 is a potential triggering point for acceleration in the main trace zone at 1.1220 – 1.1265.
Bear scenario
A steady movement below 1.1155 would mean a return of sellers. If sufficiently strong, this may result in a rising angle test at 1.1267 and then at 1.1067. This does not necessarily mean that the sellers are back, and may actually set the buyers to a secondary higher bottom.
Overview
Foreign markets will have a great impact on EUR/USD in the near future, especially on the Japanese Yen. Do not be surprised by the intervention of the Bank of Japan. Also on the table there may be a response from the US against China, which will allow the yuan to fall below 7.
The intervention of the Bank of Japan should lead to the growth of the dollar and put pressure on the euro. If the Trump administration decides to retaliate against possible manipulations with the Chinese currency, it will weaken the dollar and boost the euro.
