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BUZZ-COMMENT-Second chance looms for left-out EUR/USD bulls

Credit: REUTERS/Kai Pfaffenbach

EUR/USD beat a swift retreat on Friday after hitting 26-month highs, generating short-term bearish signals that may ultimately benefit bulls who missed the opportunity go long when the euro broke through 1.1450 resistance earlier this month [nL2N2F20P0].

July 31 (Reuters) - EUR/USD beat a swift retreat on Friday after hitting 26-month highs, generating short-term bearish signals that may ultimately benefit bulls who missed the opportunity go long when the euro broke through 1.1450 resistance earlier this month .

Daily RSI, which was in deep overbought territory, diverged on the new high and a daily inverted hammer formed during Friday's session. Both signals implied a correction in the rally was likely.

Monthly RSI implied longer-term bullish momentum remained and the rally off the March 2019 monthly low was nowhere near being in jeopardy. Longer-term indicators suggested the rally would resume toward new highs.

Bolstering the longer-term view was the U.S. interest rate outlook, which should keep the dollar from rallying significantly.

Ten-year U.S. Treasury yields continued in their bear trend, while fed funds futures prices remained buoyed near recent highs after the Fed pledged to use its full range of tools . Futures still projected rates would turn slightly negative in 2021 FFN1.

EUR/USD support sits in the 1.1800 region and 1.1570/1.1630 zone. Longer-term bulls likely lurk in those areas.

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eur/usdhttps://tmsnrt.rs/30dD0UG

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

((christopher.romano@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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