EUR/USD Analysis
Evening update: Will the EUR/USD pair continue to fall or rebound from its current level of 1.0750 ?
On the weekly chart, the EUR/USD pair is trading below the 200 DMA after facing significant resistance near the 1.1150 level. Because EUR/USD is 58% weighted in DXY, the Dollar Index's fast recovery was the key reason for the EUR/USD fall. As we discussed in our research, the Dollar Index was trading near a strong support zone of 100.50-100.80 before immediately rallying.
- Following a robust rejection, the EUR/USD dropped below the 200 DMA.
- The EUR/USD pair was aggressively rejected by the trendline and the 200 DMA, as shown in the chart; so, the price might likely move into the 1.05 and 1.07 zones.
- Given that the weekly chart's 200 DMA is approaching 1.1150, where it meets trendline resistance, we can expect the EUR/USD price to fall even further.
The accompanying chart depicts the EUR/USD's resistance and position relative to the weekly 200 DMA. The trendline resistance is at 1.1150, and the EURUSD has fallen dramatically to trade around 1.0750. In our DXY analysis, we predicted that the Dollar Index will rise beyond its current trading range of 100.50 to 100.80, a strong support zone. Because EUR/USD and the Dollar Index are inversely correlated, rising DXY causes EUR/USD to fall, and vice versa. Thus, the increase in DXY was mostly responsible for the loss in EUR/USD.
Let's have a look at the EUR/USD chart with RSI.
The preceding chart shows RSI negative divergence, which occurs when the price of EUR/USD rises while the RSI falls. Negative divergence occurs when the RSI trends downward while the price of a security rises. This type of negative divergence may indicate that the underlying security's price is about to revert.
The EUR/USD pair may continue to fall, with further weakness given by the 1.0700 and 1.0500 levels. As previously stated, the EUR/USD is inversely proportional to the Dollar Index, therefore DXY might climb to 105.50 and 107.00, respectively. Because the EUR/USD is weak and headed lower, any rise represents a sell opportunity.
Please review the weekly EUR/USD 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 |