EURUSD has broken below a key support zone that had been holding since late April, with the pair slipping under the highlighted area around 1.1654–1.1700 to suggest that a shift in momentum could be underway.
Price is currently hovering just above the 38.2% Fibonacci retracement level at 1.16337, and a pullback to the broken support zone is possible before sellers look to resume the decline.
If the former support now holds as resistance, EURUSD could roll over from the 50% Fib at 1.1681 or the 61.8% level at 1.1706. A decisive break below 1.1633 could expose the pair to the swing low at 1.1573 as the next meaningful floor.
A descending channel is also visible on the chart, with price making lower highs and lower lows since the mid-May peak. The pair is currently attempting to bounce from the lower boundary of this formation, which could account for the near-term recovery, though the broader structure still favors the bears.
The 100 SMA has crossed below the 200 SMA to confirm that the path of least resistance is to the downside and that the selloff is more likely to gain traction than to reverse. Both moving averages are situated above current price action and could reinforce the resistance area on any bounce attempts.
Stochastic is surging higher from the midpoint and appears to be approaching the overbought region, suggesting that buyers currently have the upper hand in the short term. A turn lower from the overbought zone would then signal a return in selling pressure.
RSI is also heading north with room left to climb before reaching overbought territory, so the pair could edge higher in the near term before bears regain control.
EURUSD could take cues from overall market sentiment, along with top-tier US data points like the core PCE price index. Stronger inflationary pressures could stoke the hawkish Fed narrative, which could open the door for further dollar strength.
Comments
Log in or sign up to join the conversation.