EUR/USD Bears Still in Control
It was a fast turn for EUR/USD last week and that move has grinded lower again this week, pushing below the 1.0943-1.0960 zone. Initially, that zone held the lows last Friday and through the first couple days of this week, but the 1.1000 handle was defended by sellers with this week's swing high coming a mere 2.7 pips away from the big figure.
This is similar to the mirror image of what happened about a month ago, with the initial reaction to 1.1200. Sellers pushed until a low of 1.1002, with buyers stepping in to hold the low above the big figure before driving right back to 1.1200 even with an ECB rate cut announced shortly after the support inflection.
For this instance, USD strength has continued and on the four-hour chart DXY has started to show a case of RSI divergence. This doesn't necessarily spell the end of the trend there or in EUR/USD, but it does note how quickly this move has come on and it highlights the potential for pullbacks.
Ideally, a trend will have healthy two-way action as it's going to take fresh sellers to drive fresh lows and if that positioning comes on too quickly, it can act as a hindrance to trend continuation.
This morning has seen another fresh low in the mix but this is a difficult move to chase, as the initial stages of a falling wedge are forming to go along with RSI divergence on the four-hour chart.
Again, this doesn't mean that reversals have to happen. But it does highlight that patience and pullbacks could be a more operative way forward for EUR/USD bears. The 1.0943-1.0960 zone remains a key spot of resistance potential and above that, 1.1000 is still notable. If we do see something larger develop, 1.1026 and 1.1055 are both of interest above the big figure as possible spots of lower-high resistance. - js
This is similar to the mirror image of what happened about a month ago, with the initial reaction to 1.1200. Sellers pushed until a low of 1.1002, with buyers stepping in to hold the low above the big figure before driving right back to 1.1200 even with an ECB rate cut announced shortly after the support inflection.
For this instance, USD strength has continued and on the four-hour chart DXY has started to show a case of RSI divergence. This doesn't necessarily spell the end of the trend there or in EUR/USD, but it does note how quickly this move has come on and it highlights the potential for pullbacks.
Ideally, a trend will have healthy two-way action as it's going to take fresh sellers to drive fresh lows and if that positioning comes on too quickly, it can act as a hindrance to trend continuation.
This morning has seen another fresh low in the mix but this is a difficult move to chase, as the initial stages of a falling wedge are forming to go along with RSI divergence on the four-hour chart.
Again, this doesn't mean that reversals have to happen. But it does highlight that patience and pullbacks could be a more operative way forward for EUR/USD bears. The 1.0943-1.0960 zone remains a key spot of resistance potential and above that, 1.1000 is still notable. If we do see something larger develop, 1.1026 and 1.1055 are both of interest above the big figure as possible spots of lower-high resistance. - js
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