The EUR/USD currency pair is under upward pressure, indicating a bearish reversal. The pair plunged to their new one-week low of 1.1608 early on Monday’s European trading session. It has since made a recovery and currently trades back up, at the time of writing, around 1.1650. On the defense side, analysts accept that the bilateral relationship is on the mend. Yet, it still teeters on the edge of deeper decline, unable to get its footing in a shaky marketplace.
The recent swings in the EUR/USD exchange rate signify a time of uncertainty. After the horror show Tuesday in terms of volatility, the pair has since gotten its sea legs. Directionless moving averages on the 4-hour chart indicate confusion in trend. That’s just it – there is no macro trend in the short term.
On the downside, support levels for EUR/USD are pegged at 1.1620, 1.1590, and 1.1550 – each serving as a possible deterrent to continued downward movement. Conversely, resistance levels are 1.1665, 1.1700, and 1.1745. This proximity of such support and resistance levels makes for a very tight trading channel. This creates a situation where the price cannot easily go up or down significantly.
The EUR/USD technical indicators are still forming within the negative territory, mirroring the overall bearish market sentiment on EUR/USD. Each of these indicators displays modest downward slopes. Due to this, there is increasing fear that the duo will not be able to maintain its current status. The flat 20 Simple Moving Average (SMA) just above at 1.1665 is adding to the upside restriction for EUR/USD.
The 200 SMA provides vital support for the currency pair throughout its daily low, per this 4-hour chart below. At the same time, the 100 SMA is located near 1.1605. These simple moving averages are important technical levels that traders watch intently for clues of future price action.
As EUR/USD trades in a historically tight range on the daily chart, players look cautious. The new trading landscape is daunting. Any breakout from this range will be subject to the next installment of economic data releases and overall market mood.