EURUSD Technical Analysis – Could test 1.1700

The euro currency has racked up more losses against the US dollar this week and is trading at its weakest level since April this year as traders continue to flock back into the greenback.

The downside risks remain high this week as buyers fail to show up around the 1.1800 level. This weeks FOMC meeting minutes provided further fuel for the US dollar as the minutes revealed that FED officials talked about reducing asset purchases.

Some members of the FED also added that the conditions had not yet been met for warranting taking away QE, as progress in the United States economy was not yet fast enough.

ECB President Christine Lagarde is also set to speak today, with Bloomberg reporting that ECB policymakers have agreed to raise inflation goals to allow room to overshoot the two percent inflation goal which has long been a staple of ECB policy.

So far, the news had had a negative impact on the EURUSD pair. However, not everyone is bearish towards the euro currency. Nomura Bank have noted that the EURUSD pair could buy around current trading level.

Nomura noted this week that “The mixed messaging from flows and mobility data versus price action has prompted us to take stock of what’s going on and is why we’ve turned neutral EURUSD. We have 1.18 in mind as the next level where long EURUSD positions are attractive once again with 1.17 acting as a strong support via the end-March low”.

It is particularly important that bulls defend the 1.1700 level this week in order for the medium-term bull case to remain in place. Ofcourse, much will depend on the US dollar index in terms of whether the EURUSD pair is going to breakout or reverse.

In terms of current sentiment, the ActivTrader market sentiment tool shows that bullish sentiment has increased, with 59 percent of traders now bullish. We may need to see traders turning bearish towards the EURUSD before a counter-rally commences.