EUR/USD: Bearish outside day despite easing of US-China trade tensions


  • EUR/USD charted a bearish outside day candlestick pattern on Monday. 
  • US Dollar may continue to draw bids on the US-China trade optimism. 
  • On the data front, the focus is on the US ISM Non-Manufacturing PMI. 

The EUR/USD pair is looking heavy, having carved out a bearish outside day (candle pattern) on Monday despite the trade optimism and the risk-on mood in the financial markets.

The common currency fell from 1.1175 to 1.1125 on Monday engulfing the preceding trading day's high and low. The resulting bearish outside day candlestick pattern is widely considered an early warning of an impending bearish reversal.

The trend change would be confirmed if the pair closes today below 1.1125. As of writing, the pair is trading at 1.1124, having hit a low of 1.1113 a few minutes before press time.

The US-China trade war took a heavy toll on the German economy, pushing the Eurozone's manufacturing powerhouse on the brink of recession. Therefore, the heightened prospects of the US and China reaching a trade deal are good news for Germany and Eurozone.

The market, however, bought US Dollars on Monday and may continue to do so on Tuesday, possibly because the easing of trade tensions provides the Fed more room to pause the easing cycle.

A bearish close, therefore, cannot be ruled out. The selling pressure will likely strengthen if the US ISM Non-Manufacturing, due at 15:00 GMT, blows past expectations. A weaker-than-expected print could put a bid under EUR/USD. That said, a close above 1.1175 is needed to invalidate Monday's bearish candlestick pattern.

The Eurozone producer price index scheduled for release at 10:00 GMT is not a big market mover. The pair, however, may take cues from the US Trade Balance and Markit Services PMI number due in the North American session.

Technical levels

EUR/USD

Overview
Today last price 1.1125
Today Daily Change -0.0004
Today Daily Change % -0.04
Today daily open 1.1128
 
Trends
Daily SMA20 1.1091
Daily SMA50 1.1041
Daily SMA100 1.1124
Daily SMA200 1.1196
 
Levels
Previous Daily High 1.1176
Previous Daily Low 1.1124
Previous Weekly High 1.1063
Previous Weekly Low 1.0941
Previous Monthly High 1.118
Previous Monthly Low 1.0879
Daily Fibonacci 38.2% 1.1144
Daily Fibonacci 61.8% 1.1157
Daily Pivot Point S1 1.111
Daily Pivot Point S2 1.1091
Daily Pivot Point S3 1.1058
Daily Pivot Point R1 1.1162
Daily Pivot Point R2 1.1195
Daily Pivot Point R3 1.1214

 

 

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