EURUSD is leading losses among the majors in today’s Asian session on general dollar strength. The currency pair is down by 0.19% as it trades around 1.0960. This price action follows after the dollar lost ground against most of its counterparts yesterday on excitement over a coronavirus vaccine. Today, rising political tensions in Hong Kong and China has got everyone on the edge of their seats.
Earlier today, Hong Kong labor unions called for a general strike following news that China would expand its National Security Bill. The local government is also bracing for a protest as the legislature is set to vote on a bill that would punish those that disrespect China’s national anthem. If pressures continue to mount, EURUSD could slide even deeper.
Today, ECB President Christine Lagarde will answer some questions in an online event at 7:30 am GMT. While it’s unlikely for her to discuss the central bank’s future monetary policy decisions, her optimism or lack of confidence in the euro zone’s recovery could spark some volatility on EURUSD.
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EURUSD Outlook
On the 4-hour time frame, it can be seen that EURUSD has formed an inverse head and shoulders pattern. This is characterized by higher lows after a series of lower lows. When you enroll in our free forex trading course, you will learn that this is a bullish reversal indicator. A strong bullish close above the high of May 21 at 1.1007 could equate a break of the neckline resistance. With this, we could soon see EURUSD trade higher to the next resistance level around 1.1144 where it topped on March 27.
On the other hand, if resistance at the neckline holds, EURUSD could trade lower and test support at the rising trendline at 1.0930. This price also coincides with the 50% Fib level when you draw the Fibonacci retracement tool from the low of March 25 to the high of March 26.
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