Bullish pressure on the EURUSD pair keeps mounting despite some minor tribulations in the short term. The price rises owing to persistently strong global demand. You can read more about the impact of that from our comprehensive crude oil analysis.
Earlier today, the Markit institute published Germany's latest industry numbers, which surpassed the initial market forecasts. The robust services PMI data strengthened the euro in the short term.
The EURUSD pair was thus able to break out above the upper boundary of the Accumulation range. We let you know about the emergence of the latter on our market update on inflation from yesterday.
Such a breakout was anticipated under the Wyckoff Cycle method as bullish pressure rises. The EURUSD pair thus appears to be establishing a new Markup, at least for the time being.
This directional price action takes the form of a 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. Notice that the breakout above the 23.6 per cent Fibonacci retracement level was part of the second impulse leg (2-3).
Not only that, but the breakout also drove the price above the 100-day MA (in blue). The following throwback to 1.19181 from above is also congruent with the expectations of the Wyckoff method. The throwback itself served as the second retracement leg (3-4), which consolidated above the 100-day MA and the 50-day MA (in green).
As the underlying bullish pressure now looks ready to continue rising, the EURUSD pair would likely attempt to complete the final impulse leg (4-5). It would most probably try to penetrate above the 38.2 per cent Fibonacci retracement. Bulls also have to watch the 150-day MA (in orange), which serves as a floating resistance.
Germany's services PMI jumped by 58.1 index points in June from the 52.8 points that were recorded a month prior. The consensus forecasts were expecting the index to rise to 55.8 points.
Industrial activity in the biggest economy in the Eurozone rebounded significantly in June, following a massive plunge in sentiment over the previous month. Germany's robust services PMI performance is inlined with ECB's projections for a sustained recovery in the longer term.