EUR/USD Technical Analysis: Euro Setup Bearish as ECB Looms
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- EUR/USD Technical Strategy: Flat
- Bearish Evening Star candlestick pattern hints Euro weakness vs. US Dollar ahead
- Proximity of ECB rate decision, risk/reward parameters argue against short trade
The Euro put in a bearish Evening Star candlestick pattern after rising to retest a recently broken chart support level, hinting a move lower against the US Dollar is ahead. Looming event risk by way of a much-anticipated ECB policy announcement may derail positioning however.
A daily close below support at 1.0925, the 23.6% Fibonacci expansion, opens the door for a test of the 38.2% level at 1.0845. Alternatively, a push above the 38.2% Fib retracement at 1.1036 sees the next layer of resistance marked by the 50% threshold at 1.1101.
We are keen to enter short EUR/USD in line with our 2016 fundamental outlook. Prices are too close to near-term support to justify selling the pair from a risk/reward perspective however. Furthermore, establishing new exposure ahead of the ECB rate decision seems ill-conceived. We will remain flat for now.
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