EURUSD Retreats from Its 2-Year Highs; Could German Consumer Confidence Help Extend Rally?

eurusd
eurusd

After extending its gains to a fourth trading day in a row, EURUSD is off to a bearish start in today’s trading. As of this writing, the currency pair is trading slightly lower from its opening price at 1.1568. This follows after EURUSD rose to its highest levels since June 2018 at 1.1600 yesterday.

Later today, only eh German GfK Consumer Climate report for July is due for release. Scheduled at 7:00 am GMT, it is expected to show that pessimism among German citizens improved. The forecast is at -4.6 versus the -9.6 reading for June.

The recent dollar weakness has helped propel EURUSD to its multi-year highs. Typically, when markets surge to their highs, it is expected to see some sort of pullback. Could this be what we’re seeing on EURUSD or could this be the beginning of a reversal?

Technical Analysis

On the 1-hour time frame, it can be seen that the uptrend on EURUSD is still intact. This is evidenced by the fact that the currency pair is still trading well above its trendline (from connecting the lows of July 10, July 17, July 20, and July 21). A closer look at the currency pair would show that a bullish pennant has recently formed. When you enroll in our free forex trading course, you will learn that this is widely considered as a bullish continuation pattern. A strong close above the highs of July 22 at 1.1600 could mean that EURUSD could soon make its way to its May 2018 highs at 1.1814.

On the other hand, a close below today’s Asian session lows at 1.1562 could invalidate the bullish pennant. It could suggest that EURUSD may pull back lower to 1.1542 where the 61.8% Fib level is (drawing the Fibonacci retracement tool from yesterday’s low to its intraday swing high). If support at that price does not hold, the next support level could be at 1.1504 where EURUSD could test its rising trendline.

EURUSD 1-Hour Chart

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