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The euro currency staged a big reversal against the US dollar last week as traders and investors shrugged off the powerful early month sell-off, where the pair quickly drop from 1.2117 level to the 1.1835 support level.
Market participants also looked past the dovish ECB meeting last week and decided to focus on risk-on trading sentiment, following the muted US CPI report and the signing of the $1.9 trillion US stimulus package into law.
Last week’s CFTC Commitment of Traders report highlighted that EURUSD long positions had been trimmed significantly. In fact, the positioning shift means that futures traders are their least bullish towards the EURUSD pair since June last year.
With stock markets in the United States going to in recovery mode also helped overall sentiment towards riskier currencies, which was supportive of further EURUSD strength. However, should we see markets turning bearish towards tech stock again this week, then the EURUSD pair could quickly turn lower.
Another key focus for EURUSD traders will be the FOMC policy decision, and particularly the FOMC economic projections will have a large hand in the direction of the EURUSD pair. The US dollar index has been the key driving force behind trending market moves in the EURUSD so far this month.
On the technical front, the short-term trend remains bearish while the EURUSD pair trades below the 1.2060 level, while the prevailing long-term bullish trend remains in play while the price trades above the 1.1930 level.
The EURUSD came perilously close to actually closing the weekly candle below its 200-day moving average last week. Traders should note that the pair has been technically bullish since late-May last year.
Looking at retail sentiment on the ActivTrader sentiment tool a clear neutral basis is in force. This could mean a new range between the 1.1835 the 1.2060 levels may be about to be carved out before the next major move occurs.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the Parabolic SAR indicator will turn bullish if the price moves above the 1.1980 level this week. This remains the key upside level to watch in the near-term.
Source By ActivTrader.
Gains above this area could cause the EURUSD pair to rally towards the 1.2060 level, which a huge technical area, and the location of the pair’s 200-period moving average on the four-hour time frame.
Key resistance above the 1.2060 level is found at the 1.2117 and 1.2160 levels. To the downside, the 1.1930 and 1.1890 levels are important before the 1.1830 level.
EURUSD Medium-Term Technical Analysis
Looking at the daily time chart, a large head and shoulders pattern is still in place while the price trades below the 1.2060 level. It should be noted that the bearish pattern has not reached its full downside, of 1.1700 yet.
Traders should also be aware that the Williams Alligator indicator on the daily time frame is generating a sell signal while the EURUSD pair trades under the 1.2000 handle, making this a key area to watch, especially daily price closes around this region.
Source By ActivTrader.
