Português
Español
Français
русский
The euro is still looking extremely bearish against the US dollar due to the strong technical correction at the end of last week and also developments surrounding the US dollar.
Last week the US dollar index posted one of its biggest gains in the currency markets in years, which caused the EURUSD to trade towards the 1.0700 handle.
Due to the fact that the euro has the largest weighting inside the DXY basket of currencies it is likely that if the US dollar technical up move continues, we are likely to see EURUSD weakness.
I would expect that the pair could eventually headed down towards 1.0400 level and then possibly as high as the 1.1500 level later in the year.
The ActivTrader Sentiment tool suggests that 56% of traders are bearish on the EURUSD. This is still very worrying if we consider that traders are still not that bearish despite the latest price dump this week.
As traders, we typically look to fade retail sentiment when it is overly skewed in one direction. This style of trading, fading sentiment, has been one of the most effective and used tactics of hedge funds.
See real-time quotes provided by our partner.
The EURUSD is currently showing a large amount of negative MACD price divergence has formed. The size of the divergence would indicate that a short-term bottom and a coming correction towards the 1.0400 area.
This is a not worrying chart for the EURUSD over the short-term for bulls. This bearish divergence is actually projecting a move of around 200 points. Considering how far the euro is up on the year it would be a normal correction.
See real-time quotes provided by our partner.
According to the daily time frame, the pair has broken above a large inverted head and shoulders pattern, which has projection for the EURUSD of around 1000 points.
As long as the EURUSD pair stays above the 1.0800 price level then medium-term analysis shows eventual strength is likely towards 1.1500.
