EUR/USD Technical Analysis: Topping Below 1.11 Figure?
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- EUR/USD Technical Strategy: Flat
- Outline of H&S Chart Formation Hints Euro May Be Topping vs. US Dollar
- Absence of Confirmation, Threat of Risk Aversion Argues for Patience on Short
The Euro may be establishing a top against the US Dollar as prices carve out what may turn out to be a bearish Head and Shoulders chart formation. The single currency found resistance below the 1.11 figure having launched a recovery following the ECB rate decision, as expected.
A break below support in the 1.0777-1.0818 area marked by the May 27 low and the 23.6% Fibonacci expansion on a daily closing basis paves the way for a test of the 38.2% level at 1.0602. Alternatively, a reversal above a horizontal pivot at 1.0938 opens the door for a challenge of the December 15 high at 1.1060.
Confirmation of the Head and Shoulders setup requires a daily close below neckline support at 1.0777 and so remains absent for now. Meanwhile, the threat of risk aversion amid Fed policy speculation remains significant and may boost the Euro mid carry trade liquidation. With that in mind, we will remain flat for now.
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