Prices have broken the falling wedge formation shown on the daily timeframe, towards the upside. On the 2-hour timeframe, prices have successfully retested and rejected from the upper trendline resistance of the falling wedge structure.
As seen in the chart above, there is a clear resistance zone at around 1.08915. This zone needs to be broken above and retested in order for upside momentum to pick up. Failure to break above this zone could see prices reversing back into the wedge structure and forming a lower low.
If prices are able to gather enough momentum to rise beyond 1.08915, an ideal target would be the previous daily high at 1.09780 and the 200-day EMA at 1.10460.
The monthly chart illustrates prices struggling to break below a key month support at 1.08670, further supported by three wicks below the zone but no candle stick closes since February 2020. This support could provide the necessary momentum required to push towards the 200-day EMA level discussed above.
|S1: 1.08670||R1: 1.08915|
|S2: 1.08165||R2: 1.09780|
|S3: 1.07890||R3: 1.10460|
Euro unemployment was recorded as 7.4 vs estimates of 7.7 which is slightly positive news for the Euro. Moreover, USD unemployment was recorded as 3.8 Million. This is almost 6 times higher than the previous record during the financial crisis, at 695,000.
As a result, we could see further weakness in the dollar index as the US economy continues to struggle and deficits rise due to extensive monetary controls. Trump has suggested an income tax reduction scheme during this covid 19 period, if this is accepted, US deficits will rise even further.
Watch out for ISM manufacturing PMI data release tomorrow for the USD.