EUR/USD Targets a Retest of 26-Month Highs After US ISM Data

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The EUR/USD currency pair on Wednesday extended the current weekly gains towards the 100% Fib levels after the latest US ISM non-Manufacturing data. The currency pair has pulled back slightly late on Tuesday but spiked on Wednesday to maintain a short-term bullish outlook.

The pair has now crossed to overbought levels of the 14-hour RSI in the 60-min chart. It remains several levels above the 100-hour and the 200-hour SMA lines. This could trigger a short-term pullback.

EUR/USD Fundamentals Overview

From a fundamental perspective, the EUR/USD currency pair is trading at the back of a relatively busy period in both markets. On Wednesday, the US ADP employment change for July missed the expectation of 1.5 million jobs with 167k jobs. The Markit Services PMI and the PMI Composite beat 49.6 and 50 with 50 and 50.3, respectively. The ISM non-manufacturing PMI for July beat 55 with 58.1 while non-Manufacturing new orders index outperformed 64.7 with 67.7. On the other hand, the non-manufacturing employment index, and prices paid missed 51.1 and 64 with 42.1 and 57.6, respectively. 

Earlier in the week, the US Markit Manufacturing PMI missed 52 with 50.9. The ISM Manufacturing PMI beat 53.6 with 54.2 while the ISM Manufacturing prices apid and new orders index beat 52 and 46.8 with 53.2 and 61.5, respectively. Going into Thursday, traders will be looking forward to the initial jobless claims ahead of the non-farm payrolls on Friday.

In the EU, retail sales for June beat the (YoY) expectation of -0.5% with 1.3% while the (MoM) equivalent came short of 5.9% with 5.7%. The Markit PMI Composite beat 54.8 with 54.9 on Wednesday.

EUR/USD Technical Analysis (the 60-min Chart)

Technically, the EUR/USD currency pair appears to be on recovery. It has surged above the 76.40% FIB level. This pushed it to overbought levels of the 14-hour RSI in the 60-min chart. The pair appears to be experiencing a short-term bullish bias after completing a XABCD reversal pattern.

The bulls will target short-term profits at around 1.1925 and 1.1950. On the other hand, the bears will look to pounce at 76.40% and 61.80% Fib levels at 1.1859 and 1.1827, respectively.

EUR/USD Technical Analysis (the Daily Chart)

In the daily chart, the EUR/USD currency pair appears to be trading within a sharply rising curve. This indicates a strong long-term bullish bias in the market sentiment. The pair is now in overbought levels of the 14-day RSI.

The bulls will target long-term profits at around 1.1991 or higher at 1.2127. On the other hand, the bears will target pullback profits at around 1.1764 or lower at 1.1625.

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