EURUSD Weekly Outlook – July 22 2021

Last Updated on July 22, 2021

EURUSD Outlook – July 22, 2021

Introduction

It surprised Nadex investors to hear about the U.S. House of Representatives Nancy Pelosi who was infected with the Delta variant virus despite receiving the full vaccines on the coronavirus. The virus is the most recent variant that has led to an increase in the number of infected persons around the globe.

EURO and US News

German Flash Services

The report is based on the research carried out among 800 purchasing managers who rate the business conditions in terms of production, inventories, employment, new orders, and supply. Changes in market conditions affect the way businesses react and they give an accurate reflection of the health of the economy based on the survey carried out. 

If the level of diffusion index is above 50.0, it shows a good expansion in the industry, while the figure below shows a contraction in the industry. The forecast for the Purchasing Manager’s Index is 59.4, while the previous was 57.5. If the actual data exceeds the forecast, it is pleasant for the currency but a lower outcome shows unfavorable sentiment for the currency.

USA Flash Manufacturing PMI

The data is released in the third week of a new month after the level of diffusion carried out by the Purchasing managers in the Manufacturing industry. The survey was carried out among 800 purchasing managers who were asked to rate the level of business conditions in the areas of inventories, supplier’s delivery, production, employment, and price among others. 

The survey is a leading indicator of the health of the economy because of the quick reaction of businesses in relation to the market conditions and the managers have preview information of the company’s opinion on the economy. If the outcome is greater than the forecast, it is good for the currency but if it is lower; it is not suitable for the U.S dollar. The forecasted data is 62.0 while the previous outcome came out as 62.1.

EURUSD Price Analysis

Monthly Chart Overview: Bearish Swing from resistance Zone

EURUSD monthly chart - July 19 2021

Monthly Resistance Levels 1.18965, 1.22671, 1.23628

Monthly Support Levels 1.17082, 1.16005

Previously, an economist of Bank of America forecasted the US economic growth to 7% this year, but because of the recent surge of COVID19 infection, they downgraded their forecast to 6.5% despite the fast rate of vaccination in the USA.

The psychological zone for the forex broker is the 1.17082 support level on the pair. A close below the level will strengthen the US dollar over the Euro and it will drive the pair lower to the next support level of 1.16005 and it will mean that the long-term bullish trend is over. However, buyers are equally looking at the possibility of taking over the market from the sellers around the zones for an upward movement to the high of 1.22671.

Weekly Chart Bullish

EURUSD weekly chart - 19th July 2021

Weekly Resistance Level: 1.22671, 1.19739

EURUSD Weekly Support Level: 1.17117, 1.16026

The Selling pressure on the pair has made the buying momentum to be weak as the buyers could not close above the 1.19739 high for some weeks. The sellers have been short on the currency because of the strength of the U.S dollar. If the economic situations continue to improve on the home front, we shall see it closes lower than the 1.16026 zones.

Fresh cases of (Delta variant) COVID-19 outbreak in some parts of the USA fuels fears of the resurgence of the virus. Some hospitals have recorded the new cases among those hospitalized.

Daily Chart Projections: Bullish, 

Daily Resistance Level: 1.19761, 1.18472

Daily Support Level:  1.17700, 1.17642

The bearish structure is still valid having seen the price close below the previous support of 1.17780. if the sellers can close below the support level of 1.17700, we may see another bearish swing in the new week. If they cannot close below the zone, we may see the buyers push back the price.

Bullish Scenario:

The EURUSD long position traders will wait for an opportunity from the support zone of 1.17700. A strong rejection by the buyers may take the price up from the zone should sellers fail to close lower than the support zone.

Bearish Scenario:

The trend on the daily chart is still bearish as sellers are pushing prices lower than the previous support levels. A close below the 1.17700 level will push the price lower for a continuation of the downtrend.

Conclusion and Weekly Price Objectives

The US dollar has been strong despite the rise of the COVID-19 cases as forex brokers and investors are optimistic that the economy is on the path of recovery as the trend of recovery is positive. A close below the support level of 1.17700 will take the price lower but a strong rejection around the zone will attract buyers into the market.

James S. Martin
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