EUR/USD Analysis
Evening Update: Will the EUR/USD pair continue to fall or rebound from its present level at 1.0850 ?
On the weekly chart, the EUR/USD pair is currently trading below the 200 DMA after facing significant resistance around the 1.1150 range. Because EUR/USD is 58% weighted in DXY, the Dollar Index's fast comeback was the primary cause of the EUR/USD drop. As we discussed in our study, the Dollar Index was trading near a strong support zone of 100.50-100.80 and rebounded fast.
- Following a robust rejection, the EUR/USD dropped below the 200 DMA.
- The EUR/USD pair was decisively rejected by the trendline and the 200 DMA, as depicted in the chart; as a result, the price may now move into the 1.05 and 1.07 zones.
- Given that the weekly chart's 200 DMA is near 1.1150, where it converges with trendline resistance, we can expect the EUR/USD price to fall further.
Please view the chart above for an illustration of the EUR/USD's resistance and position relative to the weekly 200 DMA. The trendline resistance is the 1.1150 zone, and the EURUSD plummeted fast and is now trading in the 1.0850 zone. In our DXY analysis, we predicted that the Dollar Index would increase from its current trading range of 100.50 to 100.80, a strong support zone. Because EUR/USD and the Dollar Index are negatively connected, an increase in DXY will lead EUR/USD to fall, and vice versa. Thus, the increase in DXY was mostly responsible for the loss in EUR/USD.
Let's now look at the EUR/USD chart using the RSI:
The chart above shows RSI negative divergence, which occurs when the price of EUR/USD rises while the RSI falls. Negative divergence occurs when the RSI trends down while the price of a security rises. This type of negative divergence can serve as an early warning that the underlying security's price is about to reverse.
The EUR/USD pair may continue to fall, with further downside given by the 1.0700 and 1.0500 levels. As previously mentioned, the EUR/USD is inversely proportionate to the Dollar Index, therefore DXY may increase to 1.0350 and 1.0400, respectively.
Please study the EUR/USD's weekly chart support and resistance levels. Every level is represented by a spot chart.
|
EUR/USD |
Support |
Resistance |
|
Level 1 |
1.0700 |
1.1150 |
|
Level 2 |
1.0500 |
1.1200 |