Euro Set To Weaken Again
InstaForex Group | Aug 26, 2021 04:19AM ET
The single European currency managed to assert strength even though US durable goods orders surpassed expectations. In fact, the volume of durable goods orders inched down just 0.1% in July on month, slightly better than the expected 0.2% contraction. Nevertheless, due to a downtick, retail sales are likely to go down in the US again. No wonder, the euro managed to gain ground against the US dollar.h2 US Durable Goods Orders/h2
Today the trajectory of the single European currency could reverse abruptly as it could be weighed down by a weekly report on US unemployment claims. The number of initial jobless claims from last week is expected to drop 8K.
Moreover, the number of continuing claims for unemployment insurance might have plummeted 40K. In other words, this weekly update will prove further strengthening in the US labor market. Hence, this will be welcome news for the Federal Reserve, as the regulator will decide on a timeline for tapering its QE program via the employment data. So, the likelihood of scaling back stimulus in the US is bearish for the single European currency.
h2 US Continuing Unemployment Claims/h2EUR/USD eventually escaped the trading range of 1.1725/1.1765 where it has been trapped for a couple of days. Traders managed to extend a correctional move from the major support of 2021. The buyers could face resistance at 50.0% and 61.8% Fibonacci levels.
The RSI technical indicator is hovering around the average level of 50. There is no signal that the euro is overbought.
According to the daily chart, GBP/USD has been following the bearish trend since early June. However, the overall downtrend is sometimes interrupted by technical upward correctional moves.
h2 Outlook and trading ideas/h2EUR/USD is likely to complete its correctional move at near 1.1785/1.1810. If the prediction comes true, next week the currency pair is expected to resume its downward move.
Both complex and indicator analysis are generating buy signals for an intraday and short-term strategy during the correctional move. However, a medium-term strategy suggests selling amid the bearish trend which has been going on since early June.
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