EUR/USD Price Rejected at Resistance, Now Eyes the Support - EUR vs USD Outlook
Euro vs US Dollar Technical Outlook
- Bull’s hesitation may extend the current sideways move
- Key chart points and signals to keep track of
Weaker Bullish Sentiment
On Thursday, EUR/USD rallied to a three -week high at 1.1008 then fell and settled below the 1.1000 handle, as some bulls seemed to cut back. Yet, on Friday the weekly candlestick closed in the green with a 0.7% gain.
Alongside that, the Relative Strength Index (RSI) fell from 59 to 51 indicating that bulls were losing momentum.
EUR/USD DAILY PRICE CHART (OCT 1, 2018 – May 27, 2020) Zoomed Out
EUR/USD DAILY PRICE CHART ( MARCH 17 – May 27, 2020) Zoomed IN
Based on the daily chart analysis, on April 17 EUR/USD corrected its downtrend and carved out a higher low at 1.0812. Since then, the price traded in a sideways move creating a set of lower highs with higher lows.
At the start of last week, the pair climbed to the current trading zone 1.0822 – 1.0992 then closed above the 50-day moving average generating a bullish signal. Yet, the market failed on multiple occasions to rally to the higher zone, highlighting bull’s hesitation at this stage.
That said, any successful close above the high end of the aforementioned zone signals that bulls may push towards 1.1097. A further close above that level could extend this rally towards 1.1240. Nonetheless, the weekly resistance levels underscored on the chart (zoomed in) should be kept in focus.
On the other hand, another close below the high end of the zone may reverse the pair’s direction towards the low end. A further close below that level could send the price even lower towards 1.0719. In that scenario, the weekly support level marked on the chart should be considered.
EUR/USD Four-Hour PRICE CHART (April 28 – May 27, 2020)
Looking at the four- hour chart, on May 18 EUR/USD rallied above the downtrend line originated from the May 1 high at 1.1018. On May 25, the price respected the uptrend line originated from the May 14 low at 1.0774 reflecting that bulls were still in charge. It's worth noting that, any violation of this line would be considered a bearish signal.
Thus, a break below 1.0892 may send EURUSD towards 1.0841. Although, the daily support level printed on the chart should be watched closely. In turn, a break in the other direction i.e. above 1.1027 could trigger a rally towards 1.1084. In that scenario, the weekly resistance level underlined on the chart should be monitored.
See the chart to find out more about the key levels EURUSD would encounter in a further bearish /bullish scenario.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.