EUR/USD bounces off 2-year lows but downside risks remain.

EUR/USD switched to recovery mode after the free-fall towards a more-than-two-year low of 1.1026 last week. But the bearish forces have not faded yet as the RSI continues to move below 50 and the MACD under its red signal line despite showing some improvement.

A closing price above 1.1180 and the 20-day simple moving average (SMA) (middle Bollinger band) could bring additional buying interest, with resistance running next up to the 1.1216-1.1232 area where the 50-day SMA is currently laying. Slightly higher, the 1.1283 number and the 200-day SMA could also keep the bulls busy before a stronger wall appears near 1.1343.

In case the pair returns below 1.1100, the lower Bollinger band at 1.1057 could halt downside movements, while a deeper decline may also stall within the 1.1000-1.0950 region.

In the medium-term (three-month picture), the market is ready to return to neutrality as the price is testing the lower boundary of its 1.1100-1.1411 range zone.  Yet with the 50- and the 200-day SMAs pointing downwards, the odds for a brighter outlook are currently viewed to be minimal.

Summarising, EUR/USD continues to face downside risks in the short-term, while in the medium-term, the pair is looking bearish-to-neutral.


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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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