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The EURUSD pair has started to break to the downside again as the US dollar index starts to crack the critical 101.00 technical resistance after being rejected from the top of its yearly range just a few days prior.
Energy and momentum had been gathering around the euro before its recent rejection from the 1.0900 level after Vice President Luis de Guindos joined a chorus of European Central Bank officials acknowledging a coming rate hike in July.
That would be the bank’s first in 12 years, and represents a significant shift after President Christine Lagarde stance, who has not been on board with rates hikes under her tenure so far.
Lagarde and Federal Reserve Chai Powell both speak on the sidelines of the International Monetary Fund’s spring meeting last week, with Chair Powell talking up the need for an aggressive rate hike.
Something that is extremely interesting right now is that traders are not bearish towards the EURUSD. Unusually, the pair is falling lower with a bullish sentiment skew.
The ActivTrader Market Sentiment tool shows that 79 percent of traders are bullish towards the EURUSD. This is a big worry for more losses as the bullish sentiment bias hints at more losses ahead if we take the contrarian view point.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the EURUSD pair could be in the process of forming an extremely large, inverted head and shoulders pattern, which could propel the EURUSD pair towards the 1.1050 area.
Upside failure around the 1.0800 level this week would be very bad indeed for bulls, however, it seems like the US dollar index is still gaining strength, so the US dollar move higher is still broad based across the FX space.
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EURUSD Medium-Term Technical Analysis
Looking at the daily time frame things looks good for the EURUSD pair has yet to break convincingly from a large wedge pattern, and still has a shot a moving higher.
If the EURUSD pair continues to hold above the 1.0800 area, then watch for an attack towards the 1.1050 region or even the 1.1180 level. To the downside, support comes in at 1.0770 and 1.0600.
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