As we enter the last few days of July we can safely say that it’s been the dollar recovery that’s been one of the outliers of the month. The dollar index is up almost 2%, past June’s highs and closing in on the 2014 high and it’s the euro that’s felt the brunt of this dollar buying. Looking at a daily chart of the euro the technical picture doesn’t look all that promising as the uptrend that commenced exactly two year ago looks to be breaking down. Having said that some indicators are signalling EURUSD is oversold so it could be prone to a squeeze back upwards as the short trade for EURUSD is quite a crowded one now. Near term the key levels of resistance are seen at 1.3455 and 1.3485 with support seen at 1.3400.
The week starts quietly in respect of economic data but builds into a crescendo in particular from the US as we see GDP data and the FOMC rate decision on Wednesday, then nonfarm payrolls on Friday. For today at least we do see PMI services data from the US as well as pending home sales at 14.45 and 15.00 respectively London time. The PMI figures is due to show a decline from 61.0 to 59.8 and anything lower than this might see the EURUSD bear squeeze as mentioned above but the focus will be on the other key economic events of the week.