July 23 , 2018
From the last couple of weeks we have mentioned to buy the pair and it bounced almost 100 pips but after arriving at 113.17 level it turned back to south side as we can say the profit booking is going on. Well the previous two trading sessions were bearish for the pair due to weakness in the dollar.
A steep decline has created the bearish sentiments in the pair but our bias remains bullish as an uptrend line from intermediate level is still valid so odds are in favor of bulls. It might be possible that bears are coming back to retest the uptrend line and after testing the mentioned line bulls may bounce back again. The current sell off was predetermined as RSI has already arrived into overbought territory and a bearish crossover on MACD indicator has occurred on the daily technical chart.
The main reason for blood bath in the pair is that The US President’s Trump displeasure with the Fed tightening and strong dollar. Trump accusation that China and EU are manipulating their currencies. Trump’s comments that he was “ready to go to 500” of tariffs in imports from China.
That said, there has been no re-pricing of Fed rate hike risks. Fed fund futures yields continue to call 1.5 more rate hikes in 2018. Further, the 10-year treasury yield continues to hover around the three-week high of 2.89 percent.
Presently pair is trading below the exponential moving average and generating bearish signal. The 110.00 is immediate support level followed by 109.00 level whereas 112.50 level is immediate resistance level followed by 113.50. So the traders and investors are advised that stay away and wait for the clear buy or sell signal and risky traders can initite their sell position for the time being and positional traders should wait for clear buy signal.