The Euro may be carving out a top below the 1.11 figure against the US Dollar having rebounded as expected after last month’s ECB policy meeting. Prices appear to be carving out a bearish Head and Shoulders chart formation, although confirmation of the setup is still pending for now.
A daily close below the 1.0777-1.0818 area marked by the May 27 low and the 23.6% Fibonacci expansion clears the way for a challenge of the 38.2% level at 1.0602. Alternatively, a rebound that takes the pair above the December 15 high at 1.1060 opens the door for a test of falling trend line resistance at 1.1175.
The Head and Shoulders setup is not actionable for now absent a break of neckline support at 1.0777. More broadly, prices are too close to support to justify entering short from a risk/reward perspective. With that in mind, we will remain on the sidelines and wait for a better-defined opportunity to present itself.
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