Is EUR/USD about to gain traction on its downtrend after a recent breakout?
With EUR scoring 7.2/10 versus USD’s 8.1/10 in this week’s FX Fundies Cheat Sheet, plus a confluence of technical resistance levels nearby, EUR/USD could be poised to resume its selloff to this month’s lows.
Here’s an area of interest I’m watching on the 4-hour time frame.
EUR/USD 4-hour Forex Chart by TradingView
Positive developments in U.S. trade talks, particularly with the U.K. and China, have renewed the appeal of the U.S. dollar earlier this month.
A few snags in economic data, notably in CPI and retail sales reports, forced the Greenback to retreat in the past week though. This took EUR/USD back up to the broken support zone which happens to line up with the 61.8% Fibonacci retracement level.
Will it hold as resistance this time?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the euro and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The 100 SMA is still above the 200 SMA on this time frame but just barely, as the the gap between the moving averages has narrowed enough to hint at a likely bearish crossover.
These technical indicators also line up with the area of interest to add to its strength as a ceiling, possibly sending EUR/USD back down to the swing low near S1 (1.1060) next. Keep an eye out for sustained bearish pressure that could even extend the drop to the bearish targets at S2 (1.0960) then S3 (1.0860).
On the other hand, look out for long green candlesticks busting above the former support zone, potentially lifting the pair back up to the next resistance at R2 (1.1360) near the swing high then R3 (1.1460).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.