EUR/USD Technical Analysis | Forexlive
On the daily chart below, we can
see that after breaking down the 1.07 level, the sellers started to target the
1.05 handle. The whole move up from 1.02 to 1.10 diverged with the MACD, which is a signal of a loss of
momentum. When the price breaks the trendline, it often comes all the way back
to where the divergence started, which in this instance would be the 1.02
handle.
Before coming to that, the
sellers will need to break the strong 1.05 support. The fundamentals have turned in
favour of the USD in February as many key economic reports started to come in
better than expected and prompt the market to price in a higher terminal rate
and no rate cuts this year.
On the 4 hour chart below, we can
see that from 1.08 the price started to diverge with the MACD and in fact we
got a slow move downward with many pullbacks. This may be a sign that the
market is not convinced yet by the February data and wants to see more to
confirm the new trend. The price yesterday rallied into the downward trendline
and found resistance.
This is the first spot where the
sellers should start to pile in targeting the 1.05 level. If the buyers manage
to break up the trendline, then we may see a rally towards the 1.07 price area
and possibly even higher towards 1.08, which will be the last line of defence
for the sellers. This is unlikely to happen though unless the economic data start to miss expectations.
On the 1 hour chart below, we can
see that the price has come into the strong 1.06 handle where the sellers have
also the confluence with a previous swing level
resistance, the trendline and the 50% Fibonacci
retracement level.
A break above the trendline would
be a bad omen for the sellers and give the buyers some conviction for a bigger
pullback. The moving
averages have crossed to the downside, so the sellers may be already in control.