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The EURUSD pair bounced back from just shy of the 1.1100 support level last week, keeping hopes alive that the worst may be over for the single currency.
However, caution us advised as the sudden gap lower for the EURUSD pair has worsened the technical outlook once again, with the charts largely pointing lower.
While it is hard to see what could cause a new low if Ukraine situation is resolved, it is not unthinkable that more losses in the EURUSD could happen ahead of the FED.
Risk sentiment is currently buoyed by the weak sanctions from the United States, although it could soon turn on a dime if the market starts to focus on QE tapering and rate hikes.
Other risks also loom for the EURUSD pair, such as optimism over a big shift in the ECB towards inflation, which is not at all guaranteed, and the US dollar index receiving more buying interest over Ukraine situation.
Stocks are also on shaky-ground, which could also hint at more losses for the EURUSD pair, given its apparent correlation with risk-off and risk-on trading sentiment.
According to the ActivTrader market sentiment tool 61 percent of traders are bullish towards this pair, with the sentiment increase by just 10 percent from last week.
I believe that more losses in the EURUSD pair will be coming soon, however, due to the current positioning skew amongst retail traders.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the EURUSD pair appears to have invalidated a large, inverted head and shoulders pattern, despite a promising pullback.
Last weeks move under the 1.1140 level invalidated the pattern, hence we could see more losses to the downside, until the 1.1000 level or lower in the short-term.
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EURUSD Medium-Term Technical Analysis
Looking at the daily time frame and the EURUSD pair looks to be trapped inside an extremely large falling price channel, between the 1.1000 and 1.1380 level.
I expect we are going to move down towards the bottom of the price channel at some stage. This could be a major buying opportunity for the EURUSD pair.
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