EUR/USD trades modestly unchanged in the 1.1760 region in early American trading on Monday. The above currency pair remains entrenched in a daily bearish trend and limping along sideways. Traders are dealing with thinner trading volumes due to the New Year’s holiday. This strange backdrop has led the most traded currency pairs such as EUR/USD to trade in shrunken ranges.
Specifically, as of writing EUR/USD is trading at 1.1761, or 16 pips weaker than its open for the day. The duo have both found it hard to get beyond the 1.1800 level of resistances. This is the first psychological resistance level that was impossible to beat. Traders are focusing on a very cautious mode in today’s market. They’re probably all waiting for clearer economic signals to provide more direction to their decision making.
Despite the recent pullback, technical analysis tells us that EUR/USD is still in a healthy area overall. Dynamic support comes from the 20-day Simple Moving Average (SMA), currently at 1.1716. The currency pair maintains a position above all its moving averages, with the 20-day SMA rising above the 100- and 200-day SMAs. This increase across all three SMAs greatly emboldens the bullish mood currently possessed by traders.
New leading indicators are flashing signs of possible weakening momentum. The Relative Strength Index (RSI) just stands at 45 and falling, a sign of weakening buying momentum. The Momentum indicator has recently dropped below its midline, reinforcing a decline in bullish fervor. An RSI that had earlier shot up to 62 has relaxed off those extremes, suggesting that momentum could be running out of steam.
Meanwhile, the 20-period SMA has flattened out just below the 1.1780 level. This makes it a key dynamic resistance line for EUR/USD. Traders are watching these signals with bated breath as they consider whether to make a move themselves in the days ahead. The broader bullish bias remains intact as long as EUR/USD remains above the ascending 100- and 200-period SMAs. These are all encouraging signs and market participants should be on the lookout because these indicators may signal changes in momentum.
For EUR/USD, technical support and resistance levels will be key. They will be steering the currency pair as it sails through this mega silent trading atmosphere. According to looking price analyst, if prices drop below the 20‐day SMA, selling pressure may increase significantly. Conversely, a move beyond the 1.1800 level could trigger another positive trend.