Dollar’s sell-off accelerated ahead of London’s opening, and trades at fresh year lows against all of its major rivals, but the AUD, under pressure after the RBA surprised with a rate cut. The EUR/USD pair advanced beyond 1.1600, as local share markets plummet.
The pair retreated from a high set at 1.1615 after worse-than-expected UK data gave the greenback some temporal relief, but the most likely scenario is that bulls will continue to dominate the pair and take retracements as opportunities to add. The macroeconomic calendar will be light today, which means currencies will be driven by sentiment.
From a technical point of view, the EUR/USD pair trades steady near the highs, with the rally having been way overstretched ever since the week started, leaving technical indicators in extreme overbought territory that anyway continue heading higher. The pair has an immediate support in the 1.1560/70 region, and a decline below this last can see a downward corrective movement towards the 1.1500/20 price zone.
Above 1.1620, the rally can extend up to 1.1713, August 24th daily high, where bulls will probably take some profits out. Nevertheless, if the retracement holds above the mentioned 1.1620 region, the bullish trend will remain firm in place, and the pair will look for fresh highs beyond that 1.1713.
The report was first published here.