EUR/USD Technical Analysis: Euro Up, Downtrend Intact After ECB
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro tests September low but ultimately gains after ECB stimulus boost
- Rally conspicuously falls short of breaking near-term downward trend
- Trades may wait for greater confirmation before taking conviction bets
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The Euro seesawed but ultimately found its way higher even as the ECB reintroduced quantitative easing alongside an interest rate cut that brought its target lending rate deeper into negative territory. Imperviousness to typically negative news flow often speaks to potent underlying strength, but the single currency’s advance also stopped conspicuously short of breaking its near-term downtrend.
Prices now stand squarely at resistance guiding them lower since late June. That barrier is reinforced by former support in the 1.1069-1.1116 area, now acting as an upside hurdle. Breaking above that on a daily closing basis would neutralize near-term selling pressure and set the stage for a move higher to challenge the 1.12 figure. On the downside, the September 3 low at 1.0926 marks the lower bound of a choppy range.
An actionable trade setup seems to be absent for now. On one hand, taking up the long side seems comically unattractive from a risk/reward perspective as EUR/USD pushes squarely into resistance. On the other, the absence of a clearly-defined bearish reversal signal warns that betting on bearish resumption is at this point premature. Traders may opt to wait and see before committing one way or another given this backdrop.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.