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Euro May Resume Downtrend vs US Dollar If Range Support Falls

Euro May Resume Downtrend vs US Dollar If Range Support Falls

Ilya Spivak, Head Strategist, APAC

EUR/USD TECHNICAL ANALYSIS: BEARISH

  • Euro takes aim at range support after rejection near 1.10 figure
  • Breakdown may imply resumption of the longer-term down trend
  • Trader sentiment studies warn selling pressure may be cooling

The Euro recoiled from range resistance clustered near the 1.10 figure, sinking toward sideways band’s support in the 1.0768-78 zone. A daily close below this barrier would not only end a month of directionless drift but also double as a breach of rising counter-trend support from the March 23 swing low.

That may imply that the dominant, long-term downtrend has been re-engaged. A challenge of that very bottom at 1.0636 is likely to follow as the next step thereafter. Alternatively, a rebound that takes EUR/USD above the range top sees the next upside hurdle at 1.1147, the March 27 high.

Euro May Resume Downtrend vs US Dollar If Range Support Falls

EUR/USD daily chart created with TradingView

EUR/USD TRADER SENTIMENT

Retail positioning data shows 52.14% of traders are net-long, with the long-to-short ratio at 1.09 to 1. IG Client Sentiment (IGCS) is typically used as a contrarian indicator, sothe net-long skew in tradersexposure suggests that the EUR/USD trend is biased downward.

However, the net-long tilt has narrowed compared with last week, with the number of traders on that side of the spectrum down 9 percent. While it is too early to extrapolate this to suggest a positioning shift is underway, it may certainly speak to cooling selling pressure.

Euro May Resume Downtrend vs US Dollar If Range Support Falls

See the full IGCS sentiment report here.

EUR/USD TRADING RESOURCES

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

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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