EUR/USD continues to trade flat near the 1.1570 mark as the market enters the American session on Wednesday. The pair is trading in a narrow range, indicative of a market with little appetite for risk. All major technical indicators suggest the currency pair remains under control for the time being. Yet, longer-term trends may be more important in shaping the direction of prices.
The 20-day Simple Moving Average (SMA) is capping upward moves for EUR/USD. This would mean it can serve as a resistance to the upside, around today’s daily high. In regard to the technical picture, the pair trades below the 100-day SMA at 1.1665. This position means that the outlook longer term is bearish. While traders continue to watch these moving averages, the tone definitely appears to be on the side of a slight negative bias.
The Momentum indicator for EUR/USD looks to be flatlining, hanging right below its midline. This slow momentum is indicative of weak buying or selling pressure on the market. Indeed, the Relative Strength Index (RSI) at 55.9 suggests that the currency pair is approaching neutral territory. Traders are taking a wait-and-see approach as they assess what’s to come on the market front. The recent movement has returned a bit, a sign of this cautiousness.
Support levels have generally been found, with today’s trading environment being generally bullish. The 200-period SMA remains formidable as dynamic support for EUR/USD at 1.1619. At the same time, the 20-period and 100-period SMAs set a short-term support base at 1.156 and 1.1575, respectively. This purely technical setup illustrates just how important a decisive close above the 200-period SMA would be. That could set the stage for even greater progress in next sessions to come.
Should EUR/USD drop back below both the 100- and 20-period SMAs, it would revive downside risks within the longer-term bearish trajectory. This major change in trend may signal a stronger downtrend to traders. As a consequence, they begin to reconsider their own assumptions.
At present, the path forward for EUR/USD is anything but clear, with conflicting signals coming from multiple technical indicators. The RSI indicator is coming down to about 46. This transition marks the importance for traders to focus on being conservative during this time of unpredictability.