- Summary:
- EURUSD led gains among the major currency pairs yesterday. Can it extend its rally with the German industrial production report on tap?
EURUSD was the top performer in yesterday’s trading. The currency pair finished the day with a 0.56% gain as it closed 62.9 pips above its opening price at 1.13092. Today, it has been a quiet trading day for EURUSD thus far. However, with the German industrial production report due later today, we could see some more volatility on the currency pair.
Yesterday, the better-than-expected US ISM Non-manufacturing PMI report triggered a wave of risk appetite that benefitted EURUSD. According to ISM, the services sector expanded more than expected in the month for June with the PMI printing at 57.1, higher than the forecast at 50.0 and the reading for May at 45.4.
The report was bullish for EURUSD because it implies that the US economy is performing well. And so, a more robust US economy suggests that the global economy would also benefit.
For today, there are no high-impact reports due for release from the US. However, the German industrial production report for May is due for release at 7:00 am GMT. The forecast is for an uptick of 11% to erase some of the contraction in April which printed at -17.9%.
A better-than-expected reading could once again be bullish for EURUSD. On the other hand, a disappointing figure could push the currency pair lower.
EURUSD Outlook
On the 4-hour time frame, it can be seen that the recent rally in EURUSD was enough to push the currency pair above resistance of the symmetrical triangle it was trading in (when you connect the highs and lows of June 10 to July 2). When you enroll in our free forex trading course, you will learn that an upside break from a symmetrical triangle is often taken to mean that buyers are dominating trading. If this turns out to be the case, we could soon see EURUSD rally to its June 10 highs at 1.1421.
On the other hand, if buyers are not able to hold on to their momentum, EURUSD could retrace more of its gains. The currency pair could pull back to 1.1270 where it may test the top of its previous triangle. This price also corresponds to the 61.8% Fib level when you draw the Fibonacci retracement tool from the low of July 3 to the high of July 6. If support at this price does not hold, the next floor could be at 1.12345 where the bottom of the triangle is.
EURUSD, 4-Hour Chart
