EUR/USD to see a recovery from the double-bottom at 1.1808

EUR/USD is trading on the lower ground on America's relative economic strength. However, EUR/USD may have a bottom – at least a temporary one. Yohay Elam, an Analyst at FXStreet, explains why the euro is set to enjoy a (temporary) bounce at the double-bottom.

Potentially upgraded EU forecasts and more nuanced Fed minutes to trigger a bounce

“The trigger to rushing into safe-haven US debt was the disappointing ISM Services Purchasing Managers' Index, which hit 60.1, far worse than 63.4 expected. Will this trend continue? Perhaps it is time for a breather, perhaps solely by lower US yields – they could come to haunt the greenback against other currencies. Looking ahead, the Federal Reserve's Meeting Minutes from the June meeting could also weigh on the greenback.”

“The rapid spread of the Delta variant in Spain and elsewhere threatens to slow the economic recovery. Europe is lagging behind its peers in vaccinating its population and may suffer a downbeat summer. However, the European Commission publishes its updated economic forecasts, and they could include an upgrade. Compared with the previous release, the immunization campaign has substantially picked up. That could boost the euro.”

“EUR/USD has bounced off the previous multi-month low of 1.1808– creating a double-bottom that could serve as a launching pad for gains.”

“Below 1.1808, the next support lines are at 1.1760, 1.17 and 1.1650. All played a role early in the spring.” 

“Resistance is at 1.1825, the daily peak, followed by 1.1885, which was a swing high earlier in the week. Further above, 1.1910 and 1.1950 await bulls.”