EUR/USD
Technical Charting Summary: There are a few reasons traders are turning bearish on the EUR/USD, following last weeks break and close below 1.180, technical signals, coupled with guidance from the ECB could well point to more weakness on the Euro.
As cited in the chart, the major currency pair recently experienced a break of a sloping trend line on the daily time frame, and a confirmed bearish condition, with the 50 DMA dropping below the 200 DMA. The pair now trades at a near term support area above the 1.1775 mark, however, there is easily
space to slide towards the 1.1700 yearly low threshold, following that, the pair enters contention areas around the 1.1615 and 1.1500 levels, respectively September 2020 lows and March 2020 highs. So sell low, and cover even lower? That could be the best strategy for trading the European Central Bank’s
upcoming decision with EUR/USD. While the common currency has been holding up better than some of its peers, this could be due to pre-ECB tensions rather than any material advantage. Apart from the theoretical long-term goals, the most recent data suggest price rises are decelerating once again. The
headline Consumer Price Index dipped to 1.9% in June, compared with 5.4% in the US. Core CPI edged lower to 0.9% – and has never received a post- pandemic boom.
With the ECB signalling no curb to bond buying, unlike the Federal Reserve or other Central Banks, this could create a decent interest rate divergence trade heading into the end of this year, and potential shorts below 1.15 or even 1.10 by mid next year.