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Resistance: 1.1226; 1.1291.
EUR/USD Technical Analysis: Strong Resistance Ahead, Trend Bearish
The pair faces a strong resistance at $1.1180 and traded with a slightly bearish sentiment.
A major intraday resistance can be seen at $1.1155, which is a 21-day moving average at the 4-hour time frame, while the pair is supported by the 200-day moving average at $1.1100.
The single currency jumped as high as $1.11548 during the day and afterward it declined from that level. At noon in Europe the pair traded around $1.11320.
The short term trend is slightly weak as long as $1.1180, which is a 200-day moving average on the 1-hour chart, holds. Any break above $1.1180 would take the pair toward $1.12168 and $1.12427.
On the lower side, a major support is around $1.1100, and any break below would drag the pair toward $1.1050 and $1.1000.
Markets await Friday's nonfarm payrolls for further direction.
US macro updates dragged EUR/USD to daily low at 1.1132 and the daily high couldn’t move above 1.1171. The pair is still under pressure around the support at 1.1100 (200-day EMA).
Downside Risks For EURUSD To Persist: Where To Target?
With the Fed taking a more hawkish tone recently, the policy divergence between the US and Europe has come into even sharper focus and should in turn weigh on the euro. Just as the US economy is picking up, European data appears to be turning in the opposite direction. Although we remain generally constructive, the composite PMI for May fell to 52.9, the lowest reading since January 2015, which have some doubting the effectiveness of recent ECB stimulus.The divergence in performance between Germany and other large Eurozone countries such as France has also widened again.
Meanwhile the inflation backdrop remains weak, and inflation expectations are still low, with the 5y5y swap remaining below 1.5%. The weak growth and inflation backdrop keeps pressure on the ECB to consider further stimulus, just as the Fed is moving closer to another rate hike. In light of these ongoing risks, the compression in net EUR short positions to only a quarter of the one-year moving average looks overdone.
As short positions get rebuilt, expect EURUSD to fall to 1.09 by September.
The euro recorded a volatile session against the dollar on Tuesday. Although the pair varied widely in the end opening price session was similar to the closing price, respectively, 1.1136 and 1.1131. Bulls prevailed in the early hours and the peak for the day was marked at 1.1172. Short-term expectations remain in favour of the euro. Support is seen at 1.1069 and 1.0998. Resistance is located at 1.1226, followed by 1.1291.