Is the way now clear for a recovery in the EURUSD?
With the London and New York stock exchanges closed yesterday, we have a shortened trading week. Europe’s power poker has begun with the European Parliamentary elections, but the markets have reacted calmly.
The EUR/USD pair was weaker in Monday’s trading. The structural band at US$1.121 proved too strong for the bulls.
Over the past few weeks, the market has twice tested the lows around US$1.111 and tried to break away from them.
Last Thursday and Friday, profit-taking in the dollar showed rising prices in the EUR/USD. Driven by the expectation of a U-turn in Fed policy, the currency pair rose to the structural level of US$1.121.
Despite the active recovery of recent days, little has changed. To show further rising rates, the market must rise above US$1.121 on a sustained basis. This level could prove crucial for the next few days. If the breakthrough occurs, the highs from early- and mid-May in the US$1.126 area must be overcome. There may then be structural resistance in the US$1.128 area. Further resistance could be around US$1.133 and US$1.139.
Yesterday, Monday, the market pushed down from the structural level of US$1.121. If this movement continues and the bears dominate the market, there may be support in the US$1.115 area. If the market breaks through here, further support could come from the lows of April 26th and May 23rd, 2019. If the market breaks through here as well, structural resistance could wait at US$1.105 and US$1.095.
The MACD oscillator pointed to Thursday’s strong bullish move with a bullish cross. The histogram did not display the price development correctly. A divergence could develop here.
EUR/USD Daily Chart | Source: ActivTrader
Written by Daniel Schuetz, External Analyst, ActivTrades
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