Trend traders huddle up!
EUR/USD is chillin’ like a villain near a key resistance zone just because the Euro Area is printing PMI reports and the U.S. is dropping key labor market-related data.
Will the pair extend its trend in the subsequent few days?
We’re taking a more in-depth have a look at the 4-hour chart:
EUR/USD 4-hour Forex Chart by TradingView
In case you missed it EUR/USD has been in a downtrend since October when the markets began taking a chill pill on their dovish Fed expectations. European Central Bank (ECB) members, however, have fed the market doves by supporting more rate of interest cuts.
Geopolitical conflicts between Russia and Ukraine and Israel and Iran-backed Hezbollah have also limited risk appetite within the region while boosting the appeal of shelter assets just like the U.S. dollar.
Keep in mind that directional biases and volatility conditions in market price are typically driven by fundamentals. In case you haven’t yet done your homework on the euro and U.S. dollar, then it’s time to ascertain out the economic calendar and stay updated on day by day fundamental news!
EUR/USD turned lower from the 1.1200 psychological handle and rode a downtrend all of the solution to 1.0350 before EUR bulls stepped in.
How low can EUR/USD go this week?
EUR bears look able to pounce from EUR/USD’s current levels just above 1.0500 because it lines up with the 38.2% Fibonacci retracement of November’s downswing.
Along with that, last week’s highs and today’s levels also line up with the 100 SMA resistance on the 4-hour time-frame.
Bearish candlesticks across the 1.0500 – 1.0520 area may attract EUR bears and drag EUR/USD to its 1.0400 lows. Heck, we may even see recent Q4 lows if the bears get traction this week!
In fact, we’re not ruling out an extension of USD’s weakness from the previous week.
In case you’d somewhat buy EUR against USD, then you can too wait for sustained trading above the 1.0600 psychological handle.
Bullish candlesticks above the extent could set EUR/USD for a possible trend line retest near the R2 (1.0704) Pivot Point line, 61.8% Fibonacci level, and trend line resistance that’s been around since October.
As at all times, be careful for other top-tier catalysts that might impact overall market sentiment, and be certain that you practice proper position sizing when taking any trades!