Andy’s Technical Take Week of July 20th 2020.
By Andy Berendieiev, Institutional Sales Manager and FX Market Analyst at Juno Markets.
This week’s news headlines are focusing on another wave of the Covid-19 pandemic spread across the globe. Some news agencies keep frightening people that key decision-makers are rushing to back up their lives and families as the number of coronavirus cases keeps growing.
However, the vast majority of currency pairs draw a completely different picture as the ancient rule of the financial market — buy rumors, sell facts — tells us that the risk appetite throughout the world’s financial market is stable, if not rising.
First of all, the most popular currency pair in the foreign exchange — EUR/USD — has completed the reversal bullish pattern on the weekly timeframe (see the chart below). On top of that, the price action accelerated this week as the European Union achieved several essential agreements in many fields and sectors.
As a result, financial institutions and retail traders rushed to buy the single European currency, which was trading above 1.16 round-figure resistance at the time of writing (07:30 AM GMT+3).
The technical outlook tells me that the uptrend is sustainable as the MACD trend indicator is bullish, the histogram’s bars are in the green, while the signal line is headed North. The RSI oscillator is well above the 50% threshold, which divides the bullish and bearish momentum. Besides, the current price is well above the 89-weeks simple moving average that acts as the support curve in the mid- and long-term perspective.
The only concern that technical analysts might have in terms of the upside potential for the pair is that the daily timeframe is getting to overbought conditions, while fast and sensitive oscillators should retrace back to a normal state and refresh the upside potential for buyers.
Therefore, our team of professional analysts suggests that some temporary pullbacks are still possible in the week ahead.
Coming back to the geopolitical perspective, the fact that the US dollar weakens throughout recent weeks, tells us that financial market price in a much more optimistic scenario for the global economy than some news might try to show.
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