The EUR/USD currency pair continues to display a very tight intraday range over the last three trading days. This movement further signals that market sentiment continues to be skittish. Some profit taking has emerged, with the pair ending the week just above 1.1200. It plummeted at the weekly opening gap, crashing to 1.1064 on Monday. This exceeding move speaks to a volatile commercial ambiance that’s trading. The ongoing trade negotiations between the United States and Japan are fueling speculation about which way Japan’s currency might go.
Traders will be looking at the most obvious support and resistance levels, especially the near-term support at 1.1160. If the EUR/USD pair falls below this important level, sellers will probably gain the upper hand. This may pave the way for deeper losses to the May bottom of 1.1064 and the 1.1000 psychological support level. On the flip side, the duo meets a strong blockade around 1.1300, currently led by the descending 20 Simple Moving Average (SMA).
Current Market Dynamics
The recent price movements of the EUR/USD currency pair show the intricate dance of forces at work driving the currency’s value. Despite entering this week with the aforementioned catalysts at their disposal, the pair has spent the week stuck in familiar ranges, as market forces have kept them under wraps. The gap lower at the beginning of the week was worrisome and could indicate a euro collapse versus USD. In reaction to that news, a significant portion of traders opted to adopt a wait-and-see approach.
To date, the duo’s trajectory near 1.1200 marks a decent rebound from previously untimely dips. The prevailing uncertainty in overall market conditions has cooled buyer appetite since summer. At the moment, it looks like sellers have turned their attention near the 1.1160 support area. Any failure of this support could bring about considerable selling into the market, as traders aim to take advantage of any possible downtrend.
Washington’s current trade negotiations with Tokyo have only added to this uncertainty. Market participants are concerned that these negotiations could reach an impasse. Such a development would be likely to weigh on currency values in both countries. Understandably, many traders are proceeding on the defensive side. They want to avoid being wrong-footed and will therefore wait for much clearer signals before committing to big positions.
Key Technical Indicators
Today’s technical analysis uncovers key technical markers that could determine the direction of the EUR/USD in the…As mentioned above, the 20 SMA remains firm as resistance, currently around the 1.1300 level. Further upward movements will find it extremely difficult to succeed unless the price decisively breaks above this level. Both the 100 and 200 SMAs are trending upwards. They remain deeply under the current trading level, showing the upward momentum and the long road and resistance to be faced.
What is more interesting is that that weekly chart shows the EUR/USD clearly still forming a bullish pattern well above all of its moving averages. This positioning points toward a very positive long-term outlook if the commodity traders can keep the buying interest strong above some key support areas. However, any extension in the direction of the 1.1380 area is still possible if bullish pressure can build steam.
Moreover, should buyers successfully lift the pair beyond 1.1300, they may set their sights on the next resistance at 1.1460. EUR/USD climbed earlier this year to a high of 1.1573. This is a significant level that acts as an important gauge for traders tracking possible highs and lows in their trading plans.
Future Prospects
Looking ahead, market participants will closely monitor developments in both US and European economic indicators as well as geopolitical factors that could impact currency valuations. Whether the EUR/USD can hold above there at 1.1160 will have significant short-term directional influence on the pair. If the price does not succeed in remaining above this support, traders can push the price back toward lower support levels. This might move sentiment in the other direction, towards more bearish bets.
If the duo succeeds in gaining strength above the immediate resistance levels, it might increase towards bullish targets. For currency traders, this step could be a harbinger of better bullish euro days against the dollar ahead. Traders will particularly be focused on developments from ongoing US-Japan trade talks. Any new progress, or lack thereof, can quickly change market expectations and move currency pairs dramatically.