EUR/USD Downside Momentum To Resume
EUR/USD – Short Term Strength To Fade?
EUR/USD remains underpinned in a long-term bearish channel structure, despite recent dollar weakness.
As illustrated in the image above, prices have remained within the weekly bearish descending channel structure.
Prices were unable to gather enough momentum to break above the upper trendline resistance of the channel and have consequently fallen, supported by bearish engulfing candles on the 4-hour timeframe.
Currently, prices are consolidating between the EMA 200 and EMA 800 on the 4-hour time frame. A break above the 200 EMA at 1.1057 is likely to see the upper trendline resistance revisited whilst a break below the 800 EMA at 1.1000 is likely to see further continuation to the downside with the channel trendline support in sight.
The euro has enjoyed its best week in a decade, supported by a shortfall in the dollar.
Although relative strength index levels and key Fibonacci levels suggest a further rise in the euro, politically diverse corona bonds are likely to weigh on the common currency.
According to two traders featured on Bloomberg, there are sizeable dollar orders yet to be executed and this will support the U.S. dollar potentially disrupting the euro’s rise. Combined with the technical outlook, our short-term view on EUR/USD points towards continued overall weakness.