- EUR/USD drops to the lowest levels since late March, down for the third consecutive day.
- Clear reversal from 100-DMA hurdle, downside break of previous weekly bottom joins bearish MACD signals to favor Euro bears.
- Downbeat RSI conditions suggest limited room towards the south, highlighting six-month-old ascending support line.
EUR/USD holds lower grounds as bears prod the 1.0750 mark after falling to the fresh low since late March during early Thursday in Asia. In doing so, the Euro pair drops for the third consecutive day while slipping beneath the weekly low, as well as the two-month bottom marked the last week.
It should be noted that the Euro pair’s U-turn from the 100-DMA hurdle and bearish MACD signals add strength to the bearish bias. However, the RSI (14) line is nearly oversold and hence suggests limited downside room before the next leg of the south run.
As a result, the EUR/USD bears are well set to break the 1.0750 support and approach the 1.0700 round figure. However, an upward-sloping support line from late November 2022, close to 1.0690 by the pres time, gains the market’s attention.
In a case where the Euro pair breaks the aforementioned support line, the odds of witnessing a slump toward March’s low of 1.0515 and then toward the yearly low marked in January near 1.0480 can’t be ruled out.
On the other hand, a daily closing beyond the 100-DMA level of 1.0815 isn’t an open welcome for the EUR/USD bulls as the previous support line from September 2022, around 1.0920 at the latest, holds the key for the buyer’s entry.
Following that, the 1.1000 psychological magnet may act as an extra barrier for the Euro buyers targeting further upside of the pair.
EUR/USD: Daily chart
Trend: Limited downside expected
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The EUR/USD currency pair was seen renewing its two-month low near 1.0750 on Monday, as the market sentiment remained bearish. With the bearish move, the pair looks set to test its multi-month-old support around the 1.0700-1.0675 area.
The pair initially started the trading session on a positive note, on the back of the weekend news that Ireland and the EU had agreed to a Brexit deal. However, the optimism was short-lived, as the renewed spike in Covid-19 cases in the Eurozone sparked risk aversion and drove investors out of the euro.
The latest wave of optimism regarding the potential approval of a vaccine for the virus has also been credited with the bearish outlook. The EUR/USD was seen shedding more than 80 pips from mid-August high on Monday, weighed down by expectations for further global stimulus measures.
In terms of technicals, the pair has been in a downtrend since early August and the outlook remains bearish. The pair has formed a lower high and lower low pattern, which further confirms the bearish outlook. Additionally, the Relative Strength Index (RSI) is trading near its lowest levels in two months, indicating that the downside momentum has been strong.
The short-term support for the pair is seen at the two-month low of 1.0750. A break below this level could trigger further downside and open up a path lower towards the multi-month low around 1.0700-1.0675 area. If this support is breached, the pair could fall further towards the psychological 1.0500 level.
On the other hand, the immediate resistance for the pair can be found near the 1.0850 area. A move beyond this level could offer some respite to investors and push the pair back towards the 1.1000 mark.
Overall, the EUR/USD currency pair is likely to remain under pressure in the near-term, as the risk sentiment weakens and the pair struggles to find a bottom. Traders should keep a close eye on the 1.0700-1.0750 area, as a break below this level could trigger further downside.
