EUR/USD Technical Analysis: A Top in Place Below 1.08?

To receive Ilya's analysis directly via email, please SIGN UP HERE

Talking Points:

• EUR/USD Technical Strategy: Flat
• Euro chart positioning hints a turn lower against the US Dollar may be brewing
• Risk/reward considerations, fundamental uncertainty argue against short trade

The Euro put in a bearish Dark Cloud Cover candlestick pattern, hinting that the beginnings of a turn lower against the US Dollar may be starting to take shape. Negative RSI divergence hints at ebbing upside momentum and bolsters the case for a downside scenario.

From here, a daily close below rising trend line support at 1.0684 opens the door for a test of the 14.6% Fibonacci expansion at 1.0589. Alternatively, a push upward that breaches the 38.2% Fib retracement at 1.0828 paves the way for a challenge of the 50% threshold at 1.0978.

Risk/reward considerations argue against taking a short position at current levels as prices sit squarely atop near-term support. Furthermore, the threat of renewed “Trump trade” unwinding makes for a vulnerable greenback. On balance, opting for the sidelines seems prudent for now.

Will the Euro continue to rise through the first quarter of 2017? See our forecast and find out!