EURUSD Weekly Outlook & Technical – July 28 2020

EURUSD Outlook & Technical Analysis

Introduction

VideForex investors and other institutional traders will be glad to see that the Eurozone shows excellent signs of recovery amid the second wave of the COVID-19 pandemic. 

Among the major currencies, the United States of America is the most hit with the recent outbreak of the pandemic.

As the week unfolds, we expect the macro news to provide certain information for the EURUSD traders and investors at large.

Euro Zone Fundamentals

German Prelim GDP: The forecast is-0.9% while the previous data was -2.2%

The GDP shows the economic activities in terms of growth or decrease over a specified period. 

Last week, some data were obtained from the Euro zones showing economic contractions during the Q2 because of the lockdown in the COVID-19 pandemic. 

From other reports, the German economy is expected to shrink by 9% while the other Eurozone is to contract by 11.2%.

An outcome that is higher than expected reading is good for the Euro currency, and it is bullish for the major, while a lower outcome is a bearish reaction for the Euro.

U.S. Fundamentals

The Federal Open market Committee meeting. (FOMC)

Investors, Institutional traders, retail traders, and other trading brokers are waiting eagerly for the announcement of the FOMC officials on the next step the government wants to take to put the economy in the right direction has the government battles the resurgence of the coronavirus. 

Interested parties will want to know when the next stimulus plan can be implemented, and the GDP outcome for the 2nd quarter will not impress as the major currencies were battered with the effects of COVID-19.

From the FOMC statements, if we get a dovish report it means bearish for the US currencies, but if the statement is more hawkish than expected, we shall have a bullish momentum for the US dollar.

EURUSD Long-term Objective: Bearish Bottoming 

EURUSD: Technical Analysis

Monthly Chart

EURUSD outlook - Monthly Chart - July 28 2020

Monthly Resistance Levels: 1.14950, 1.15693, 1.18323, 1.21545, 1.25558

Monthly Support Levels: 1.03402, 1.06359, 1.10292

The July candlestick has broken above the resistance zones of 1.15698 of 02 March 2020 with strong bullish momentum in the major currencies. A close above the resistance zones will expose the 1.21545 zones of 01 March 2018, confirming total dominance of the Euro and the effect of the stimulus on the economy.

The significant areas where the bears might want to push back the bulls rally is at the resistance zones of 1.25558 on 01 February 2018 and of 1.21545 of 01 March 2018.

Weekly Chart Bullish

EURUSD outlook - Weekly Chart - July 28 2020

Weekly Resistance Levels: 1.14963, 1.14222, 

Weekly Support Levels: 1.06361, 1.07197, 1.0766, 1.08965, 1.08968, 1.11726, 1.12430

The bullish accumulation of 29 June and 06 July 2020 played out at the support zones of 1.2430 and 1.11726. The Bulls were able to gain momentum in the past weeks to close above the resistance zone of 1.14963 of 09 March 2020. 

The swing low to swing high from the weekly chart above shows that we are in an uptrend for an extended period until we get a definite reversal.

The broken resistance zone of 1.117726 will likely be turned into a support in the nearest future should price retest that zone before it surges higher again.

EURUSD Mid-Term Projections: Bullish Trending

Euro to US Dollar Daily Chart

EURUSD outlook - Daily Chart - July 28 2020

Daily Resistance Level: 1.14971, 1.14226, 1.13406, 1.09911

Daily Support Level: 1.06377, 1.07271, 1.07684, 1.08707, 1.11681

On the daily chart time frame, we can see that the golden cross of 50 moving average and 200 moving average did play out, and the uptrend was established on the time frame that it appeared.

After the railway track, candlestick closed above the resistance zone of 1.14971; you can see that the bulls have been dominant, and the upward trend is bullish with little or no resistance from the bears.

The bears’ momentum was taken out as the bulls were able to take out the resistance levels of 1.13406, 1.14226, and 1.14971. These were the bear’s levels of dominance previously as of 09 March, 10 June, and 12 June 2020, respectively.

Euro to US Dollar H4 Chart

H4 Resistance Level:  1.17388, 1.14225, 1.13205

H4 Support Levels:  1.11660, 1.11900, 1.12610, 1.1279  

The bearish accumulation of 21 July 2020 around the resistance level of 1.14225 of 10 June 2020 couldn’t push back the bulls rally like it has done previously with a strong bearish engulfing candlestick.

The current position of the EURUSD price may have a minor correction at the level where it is because of the bullish momentum is in an overbought zone on the stochastic indicator. 

If the bearish engulfing candlestick that just closed is confirming the expected move at the zone where the current price of 1.17383 is, we shall see the correction happen.

The Bullish build-up started gradually from the regular divergence of 21 June 2020. You can also see how the lows have supported the stochastic oversold zone for a swing to the upside.

The support levels of 1.11900 and 1.12610 of 19 June 2020 and 1.12779 gave the bullish surge to the upside breaking above resistance zones 1.14225. 

We expect the uptrend to continue until we see a reversal pattern to the downside in the future before we can say that the bulls have lost their momentum.

Bullish Scenario:

The general bullish scenario is at play on all the time frames because the bulls were able to take over the market, having taken out the psychological zone of the EURUSD price of 1.14179 and 1.14226 on the daily time frame that has been a place of rejection for the bears. 

The trading broker can trade in line with the favourable news coming out of the Euro zones.

The uptrend is should continue until it hits the round-number resistance zone of 1.20000 on the higher time frame if all things being equal.

Bearish Scenario:

From the happenings on the chart, we can see that the bears are not having any form of control at the time of this report. 

The US economy’s weakness and the effect of the second wave of the COVID-19 is part of what is affecting the major currency pair. 

Also, the USA’s trade war is engaged in with the Chinses is not helping the global economy.

Conclusion and Weekly Price Objectives

The trade war between the USA and China is another issue that can trigger the market volatility in this week of macro news.

However, the Euro economy is recovering fast as the effects of the stimulus plans and low-interest rates are helping to boost the European economy.

The general agreement between the European Union to have a COVID-19 recovery fund combining the budget stimulus and the monetary policies propel the currency (Euro) to surge high, and some analysts are looking at the $1.20000 mark.

However, the bulls rally is expected to continue its uptrend this coming week as we await the various macro news to bring corrections to the trend before resuming the trend.

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