EUR/USD Technical Strategy: BEARISH
- Euro settles near one-month low after recoiling from trend resistance
- Trend bias bearish but risk/reward setup may be unattractive for shorts
- Event risk trigger may be needed to spark the next big directional move
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The Euro has stalled near one-month support after recoiling from resistance capping upside progress against the US Dollar since late September 2018. That barrier has also established a shallow but unmistakable series of lower highs. Indeed, prices appear to be stair-stepping lower, despite a lot of chop along the way.
From here, a daily close below the March 7 low at 1.1176 opens the door for a test of the 1.1110-32 area, marked by a range floor dating back to mid-2017. Thorough invalidation of the near-term bearish bias is some way off, calling for a daily close above trend line resistance now situated at 1.1412.
Tactically speaking, this seems to broadly argue against the long side while highlighting the unattractive risk/reward setup in establishing short exposure. Directional conviction may need a fundamental jolt to rebalance the scales and revive activity. The week ahead offers ample opportunity for exactly that.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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