EUR/USD: Trade optimism could bode well for EUR, focus on Tuesday's close

EUR/USD created a long-legged Doji on Friday, signaling bear exhaustion.
A close above 1.1306 is needed to confirm a bullish reversal.
Trade optimism could keep the USD on the defensive, helping EUR/USD produce a bullish close above 1.1306.

Omkar Godbole FXStreet Contributor

EUR/USD is currently trading at 1.1315, having clocked a three-month low of 1.1334 on Friday.

The drop to November lows was likely triggered by a softer Eurozone/German economic data and dovish ECB expectations, but was short-lived, as markets offered the greenback in the NY session on speculation that the US and China would be able to reach some kind of trade compromise before the March 1 deadline.

The pair, therefore, recovered entire losses and ended largely unchanged on the day at 1.1291.

Essentially, EUR/USD created a long-legged doji candle, which is widely considered a sign of bearish exhaustion/indecision. A bullish trend reversal, however, would be confirmed only if the spot closes tomorrow above 1.1307 (high of Friday's doji candle).

That looks likely as the focus seems to have shifted from the Eurozone recession fears to the easing US-China trade tensions and growing evidence of a deeper economic slowdown in the US.

The focus, however, may shift back to the German recession fears if the ZEW survey, scheduled for release at 10:00 GMT tomorrow, disappoints expectations.

As for today, the spot is likely to trade in a sideways to the positive manner with thin volumes, as the US is observing a trading holiday.

EUR/USD Technical Levels

1. R3 1.1406
2. R2 1.1359
3. R1 1.1329
PP 1.1281
1. S1 1.1251
2. S2 1.1204
3. S3 1.1174

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD clings to daily gains near 1.3350

GBP/USD holds just in positive territory around 1.3350 on Friday as the Greenback keeps a vacillating price action. With Fed rate hike expectations easing and US markets closed for the Independence Day holiday, Cable remains on track to post solid weekly gains.

EUR/USD remains sidelined around 1.1440

EUR/USD holds on to its recent gains and consolidates around 1.1440 at the end of the week as the US Dollar lacks clear direction. In the meantime, trading conditions remain subdued, with volatility constrained by the closure of US markets for the Independence Day holiday.

Gold flirts with two-week highs, targets $4,200

Gold extends its recovery for a third straight day, advancing toward the $4,200 mark per troy ounce on Friday. The precious metal looks set to snap a four-week losing streak as softer-than-expected June US NFP data prompt investors to scale back expectations of further Fed tightening.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.