The EURUSD pair traded with a bullish tone all week. Ever since it reached 1.17 area, it bounced in a relentless bid to make new highs.
So far, it failed.
Unidirectional moves in the currency market are not strange during the summer trading months. They reflect the poor liquidity in the market and the tight correlation driven by strong algorithmic trading activity.
Just like the AUDUSD pair, the EURUSD price action was mostly driven by the way the stock market moved. Any bullish price action in the U.S. stock market translated with a leg lower on the USD. Hence, higher EURUSD.
Not even much-higher than expected inflation in the United States helped the dollar. With Europe mostly in vacation mode, the EURUSD pair is at the technical traders’ mercy and strongly influenced by high-frequency trading.
Unemployment Claims Fell Below One Million for the First Time During the Pandemic
Since the pandemic started, financial market participants focused on its impact on the jobs market. Every country had suffered – but the main focus was on how the largest economy in the world copes with the job losses.
Yesterday’s data showed a declining trend in unemployment claims. Yes, the number is elevated, and almost a million people applied for unemployment benefits the week before. However, it is for the first time in months that the number of unemployment claims falls below a million – a small sign of improvement.
However, the USD did not react positively. Remember? Good news for the stock market means bad news for the USD lately. As such, the EURUSD bid tone continued.
EURUSD Technical Analysis
The EURUSD pair forms a possible flat pattern. Judging by the retracement level for the b-wave (in black), it might have completed the move higher yesterday.
The next leg in the pattern should have a similar length with the first one, pointing to 1.1650 sooner rather than later. To trade it at the market, place a stop loss at the recent highs (1.1920) so to avoid the possibility that the b-wave is not completed.
EURUSD Price Forecast