EUR/USD Technical Analysis: Euro Sellers Challenge Uptrend

EUR/USD TECHNICAL ANALYSIS: BEARISH

• Euro challenging 3-month trend support, break may restart downtrend
• Past trend dynamics imply drop toward 1.07 if selling pressure prevails
• Dense near-term resistance presents challenge for attempted recovery

The Euro finds itself at a decisive spot, sitting squarely at support guiding the upswing over the past three months. A break below it and the 1.1069-1.1104 congestion area would suggest the dominant downtrend has been resumed. The first layer of support thereafter lines up in the 1.0968-90 zone, followed by the October 1 swing low at 1.0879.

EUR/USD daily chart created with TradingView

That may be just the beginning however. Pulling back to the weekly chart offers a sense of what might follow if a break of support sees the downtrend re-engaged. The dynamics of the decline since mid-2018 imply an average downswing of 4.6 percent. Such a move would put the single currency just above the 1.07 figure, amounting to the lowest level since April 2017.

EUR/USD weekly chart created with TradingView

Zooming in to the four-hour chart reveals prices are retesting support-turned-resistance at 1.1123 having found interim support just below the 1.11 figure. Neutralizing immediate selling pressure in earnest looks challenging however. EUR/USD will need to reclaim a foothold above recently-broken trend support guiding December’s rally as well as a falling resistance line defining 2020 trade thus far.

EUR/USD 4-hour chart created with TradingView

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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