EUR/USD returns above 1.13 but negative risks still alive.

EUR/USD registered a three-month low at 1.1233 on Friday before closing negative for the second consecutive week. On Monday the pair managed to rise back above the 1.1300 level, with momentum indicators shaping a bearish-to-neutral picture for the short term; the RSI is recovering towards its 50 neutral level, the MACD seems to be showing easing negative momentum, while the red Tenkan-Sen line continues to lose ground below the blue Kijun-sen line.

Support around 1.1265 should be in focus if bearish action resumes, while more importantly, a significant beat of the 1.1214 level would activate the long-term downtrend started from 1.2554 (January 2018), turning the medium-term outlook from neutral to negative. In such a case, the price could fall deeper to meet support around 1.1140, a frequently tested area during 2016-2017. If the sell-off continues then the next stop could be somewhere near 1.1050.

Alternatively, an extension higher could find immediate resistance from the 23.6% Fibonacci of 1.1356 of the down leg from 1.1814 to 1.1214. Should buyers drive the price above 1.14, the rally could pause near the 38.2% Fibonacci of 1.1444 before a crucial battle around the 200-day moving average which currently stands 1.1528 and slightly above the 50% Fibonacci. Further up and above the 1.1569 top, the market could experience fresh buying pressure.

Summing up, the short-term bias looks bearish-to-neutral, while the medium-term outlook holds neutral as long as the price trades below 1.1569.


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This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Source: XM

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