Today's session is being marked by the sell-off on the stock market, after Evergrande group, one of China's largest real estate groups, finds itself in a very difficult situation, the possible collapse of the company creates a real risk of default by from other heavily indebted companies and investors fear it could trigger a domino effect. As a result, major global equities indices fell sharply, while “safe-haven assets” and the USD regained strength in light of the current market instability.
Technical Analysis EUR/USD: 4 hours time frame chart.
On the 4-hour chart we can see that the bearish movement has been intensifying over the past few sessions.
At the moment, buyers are trying to regain control, however the rebound may be limited, as are past moves. It should be noted that the highs have been getting smaller and smaller, while the lows too.
The current bullish movement may extend towards the Fibonacci levels, but traders should closely monitor the price behavior near the 61.8% and 78.6% zone, as these zones could trigger a rebound of bearish movement if sellers can regain control of those zones.
EUR/USD, 4 hours time frame chart. Source: xStation 5
US dollar Index (USDIDX)
On the daily chart, we can see that the US Dollar Index has been recovering over the past few sessions and is getting closer and closer to its previous relative high marked by the gray rectangle.
This zone has proved to be very important and difficult for buyers. However, if buyers manage to break above this zone, the USD could gain renewed bullish momentum in the medium to longer term.
USDIDX, daily time frame chart. Source: xStation 5
During this session, safe haven assets such as CHF and JPY continue to lead gains.
Source: currency-strength.com
Henrique Tomé, XTB Portugal
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