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Hugo in HTO Trading,

EURUSD: On the road to recovery

The Greece’s Prime Minister Alexis Tsipras resigned last week, hoping to strengthen his hold on power in a snap election after seven months in office in which he fought Greece’s creditors for a better bailout deal but had to play ball. Now the country appears almost certain to be heading for an election in September.

Last week the dollar index extended its decline to lowest level in nearly 2 month as market participants start to close long positions due to the lack of clues regarding the timing of a rate hike by the Fed. In addition, the US Markit manufacturing PMI brought a disappointed expectation, coming in at 52.9 for the current month vs. 54.0 expected and down from July’s 53.8.

Since the start of the year the currency fell more than 4.5% and is in an accumulation phase, trading above the 10-week moving average. Last week the EURUSD rallied and close in the green near the high of the week with a wide range. The stochastic is showing a strong bullish momentum and is crossing above the 50 mid line.

Expecting an upward move to a weekly key resistance at 1.2041 on a break above key resistance at 1.1530 (scenario 1) or a break below the key resistance at 1.1311 could throw the currency to 1.0980 (scenario 2).