The EURUSD is now reacting a little more aggressively to the weaker US data, and is testing its 100 hour moving average at 1.04494. The high price just reached 1.04626 and backed off a bit, but pressure still remains on the key barometer for buyers and sellers (the price is trading at 1.0452 as I type).
The last time the price traded above its 100 hour moving average was back on June 9.
The price has moved down 4 of the last 5 trading days reaching a low price yesterday at 1.03582 (the high on June 9 was at 1.0773 - the price moved down 415 pips) before bouncing back higher into the close.
Of significance, is the low yesterday stayed above the lows from May between 1.0348 and 1.0353. It also stayed above the 2016 extreme low at 1.0339. That low from 2016 was the lowest level since December 2002. So the price yesterday got within 20 pips of a 20 year low. The inability to crack those lows helped to give the buyers some hope. At least it further defined a low risk defining level.
With the price now higher and above the 100 hour moving average, the buyers are making a play. Can they keep the momentum going?
Going forward, move above the 100 hour moving average with momentum, and the price will start to look toward other swing areas from the week and going back to May as well. Looking at the hourly chart, upside targets include 1.04578, 1.04709, 1.0482, 1.0490 (see lower yellow area and red numbered circles), and the high from yesterday's trade near 1.0507. The 38.2% retracement of the move down from the high price last week comes in at 1.05168.
If the buyers cannot keep the momentum going, rotation back to the downside is likely with intraday support between 1.0411 it 1.04289 (see 5 minutes chart below). Those are the 100 and 200 bar moving averages on the 5 minutes chart
The market honestly can still go either way. If the market focused on the future economy, a weaker dollar may start to creep into the equation as growth slows. If the market is focused on Fed policy, hikes of 175 basis point between now and the year end is faster than ECB for sure (and most other countries).
The technicals help to tell the how the short-term story plays out. Right now the buyers (weak economy) are trying to make a play.
PS. the EURCHF decline is exerting some downside pressure on the EURUSD after the SNB hike. That also muddies the water a bit.
