This narrow ranging pattern that has dominated here for the past couple of weeks looks unlikely to change, partly because it is a Monday, but also because the US Dollar continues to range as it has for the past year due to the lack of resolution by its key driver – the question of whether Iran and the USA will conclude a peace deal, or whether there will be a resumption of the kinetic war between the two countries and their allies.
President Trump continues to signal uncertainty over Iran, saying one minute that he expects a deal soon, the next that he will resume the war if Iran refuses. Which begs the question – why does this go on for two months without ever reaching a deadline?
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Another potential issue today is the scheduled release of key US economic day in the form of ISM Manufacturing PMI data, which might move the price a bit, but almost certainly will not create any dramatic directional movement.
EUR/USD Technical Analysis
The ongoing story of this currency pair is a continuing loss of direction or conviction. This is partly because the US Dollar is its main driver and the US Dollar has been trading sideways for the past year, which is a relatively long consolidation period. The Euro has not been subject to much interest or controversy, so the other side of the pair has not added much to the mix.
The price has been held for two weeks within a relatively narrow range, supported at $1.1587 with the closest overhead resistance at $1.1681.
It can be argued that recent days have seen a weakly bullish bias, as we are seeing higher lows and higher highs.
My Take on EUR/USD
The thing to watch here today is likely going to be how the price reacts when it next touches the nearest support and resistance levels. Either of these will probably be today’s pivotal point. I would be happier with a long trade after a bounce off support than a short trade from a bounce off resistance. This style of trading also suits the typical price action of this currency pair, which is prone to retracements. As volatility is very low, reversal trades would need to be scalps.
Review, Support & Resistance Levels
In my previous EUR/USD analysis on 27th May, I thought that the EUR/USD currency pair was likely to find support and resistance at $1.1619 and $1.1650, which was a good call on the short side as that resistance level held.
Risk 0.75%.
Trades must be entered before 5pm London time only.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.1681 or $1.1700.
Place the stop loss 1 pip above the local swing high.
Move the stop loss to break even once the trade is 20 pips in profit.
Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1624 or $1.1587.
Place the stop loss 1 pip below the local swing low.
Move the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
There is nothing of high importance scheduled today concerning the Euro. Regarding the US Dollar, there will be a release of ISM Manufacturing data at 3pm London time.
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