China says yuan will not continue to fall
The EURUSD became a safe haven yesterday. The market seemed to think if the US and China are going to spar, the EU would benefit. It is hard to connect the dots, but the EURUSD was a beneficiary. I might add, that the technical picture kept improving as the price first based against the 1.1100-09 area and then started to take out higher levels including the 100 bar MA on the 4-hour chart (blue line currently at 1.11716) and a downward sloping trend line.
The rally also took the pair to and above the 100 day MA at 1.12286 and then the 200 bar MA on the 4-hour chart at 1.12362. That rally stallled at 1.12489. The run up moved back below those last key MA targets and that was enough to turn the buyers into sellers. The correction lower was on (helped by a fixing of yuan below 7.000 level)..
We are now down testing the underside of broken trend line and a swing area in that 1.11807 to 1.11871 area. Below that the 100 bar MA on the 4-hour chart comes in at 1.11717, followed by the 38.2% of the move up comes in at 1.11639. That is also near the high’s from last week’s trading. I would expect decent buying there (by patient buyers) on the back of the dual technical levels.
Taking a look at the daily chart below, the March low reached 1.11734. The early April low was at 1.11832. In June the swing low was at 1.1181. We are in that area now between 1.1173-83. That is a support/swing area for the day too. I would think traders would use the level for intraday buy/selling bias. i.e. if the 1.11639 area holds on a dip, getting back above the 1.1173-83 will be eyed…..