EUR/USD Rate Holds Steady as the Relative Strength Index Retains Bullish Trend

EUR/USD EXCHANGE RATE KEY POINTS

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The EUR/USD emerges from the narrow range to start trading at a new monthly high at 1.1345 and the bullish flag formation might unfold in the next few days as the Relative Strength Index preserves the bullish trend from early 2020. Read on to find out what you should expect!

EUR/USD Rate Holds Steady as the Relative Strength Index Retains Bullish Trend

The EUR/USD rate seems to be right on track to try out the June high at 1.1423 after the limited reply to the USA (NFP) Non-Farm Payrolls report. This happens as the USD declines against all the world’s major currencies since the beginning of July.

It seems like the weakness of the US Dollar will continue. This is because the IG Client Sentiment Report continues to show a crowding trend in the current currency market and the EUR/USD might remain afloat ahead of the ECB (European Central Bank) meeting to be held on 16th July with the governing council appearing to be on the right track to maintain the existing policy.

Recently, the ECB’s chief economist, suggested that the central bank will be moving to the sidelines after the expansion of the PEPP (Pandemic Emergency Purchase Programme) by 600 billion Euros in June as the Eurozone seems to the on the second phase of recovery.

The ECB seems to be on the right track to conduct a wait and see strategy although the central bank is ready to “change most of its instruments” with Yves Mersch, who is a board member revealing that the Coronavirus pandemic fund will significantly minimize the burden on fiscal policy and the increased for an additional easing of the current policy stance.

In Turn, the President and associates might steadily change the forward guidance in the coming months as Charles Michel, who is the European Councils present vowing to start negotiating all the member states. Moreover, they have indicated that they will be convening a face-to-face summit in Brussels by mid-July. It is highly likely that an increased number of the council officials might control speculation for extra financial support as the Eurozone activity is highly expected to hit a rebound in their 3rd quarter.

Having said that, the hesitation to adopt low-interest rates might help keep the EUR/USD steady as the European council appear to be working to maintain the current policy and the EUR/USD rate might stage other attempts to try out the march high at 1.1495 with the formation of the bull flag taking shape as the RSI continue tracking the bullish trend since March.

EUR/USD RATE CHART

EURUSD-Bull-Flag

  • Remember the fact that the opening range in July was a key factor for the EUR/USD in Q2 of 2020 with the exchange rate carving a major low in October.
  • On the other hand, the RSI seems to be underscoring the continuation approach with the oscillator rebounds and preserving the bullish trend from the beginning of the year 2020.

Also remember to read through EUR/USD Long Term Technical Analysis May 2020.

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