EUR/USD Forecast: contained within a descendant channel

The common currency has accelerated north with the European opening, boosted by robust local data. The German IFO survey showed that German business confidence improved more than expected in July, due to the easing concerns of a Grexit after the country reached an agreement with its European counterparts. Also, the EU money supply rose, to 11.8% in Jun from 11.2% in May. The figure, that includes currency in circulation and overnight deposits, is a clear result of the ongoing QE, and points for higher inflation levels in the region.

Later on in the day, the US will release its Durable Goods Orders for June, expected at 3.0% from previous -2.2%. The release can be a good barometer of the situation of the US economy and therefore anticipate whatever the Federal Reserve will decide this Wednesday, in its economic policy meeting. 

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Technically the EUR/USD pair presents a strong bullish short term tone, as the 4 hours chart shows that the price has accelerated strongly above a bullish 20 SMA, whilst the technical indicators head sharply higher in positive territory. The rally, however, stalled at the roof of the daily descendant channel coming from 1.1435, June monthly high, around 1.1100. As long as the price holds above 1.1050, the immediate support, the pair will maintain its upward potential, with large stops waiting above the 1.1120 level. If triggered, the rally can extend up to 1.1160, and above this last, towards the 1.1200 level. 

Below the mentioned 1.1050 level on the other hand, the pair will likely retreat towards the 1.1000 price zone, whilst further declines below this last expose the 1.0950/60 region.


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