EUR/USD Forecast: Proposed Sanctions Unmasks Key Level as Euro Fades
- U.S./European sanctions hurt Euro.
- Spotlight on upcoming U.S. economic data.
- Bear flag break potential.
EURO FUNDAMENTAL BACKDROP
Planned U.S. and European sanctions on Russia have weighed negatively on the Euro this morning, highlighting the currencies high correlation to the geopolitical situation in Ukraine. Once details around the sanctions are revealed, the Euro could come under additional pressure.
The economic calendar is mild today with not much from the Euro zone, leaving U.S. ISM Non-Manufacturing (Services) PMI data and Fed speeches the focus for the day.
EUR/USD ECONOMIC CALENDAR
Source: DailyFX Economic Calendar
EUR/USD DAILY CHART
Chart prepared by Warren Venketas, IG
Daily EUR/USD price action has slipped below the psychological 1.1000 support level and now seeks to test the developing bear flag chart pattern (blue). Despite the Euro’s recent rise, bearish momentum remains with prices trading firmly below all three EMA’s. A candle close below flag support could open up further downside for the pair, possibly breaking below the long-term symmetrical triangle support trendline (black).
- Flag support (blue)
- Triangle support (black)
IG CLIENT SENTIMENT DATA: BEARISH
IGCS shows retail traders are currently LONG on EUR/USD, with 69% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment resulting in a bearish bias.
Contact and follow Warren on Twitter: @WVenketas
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.