EUR/USD likely poised for further breakdown on dollar rebound
James Chen, CMT June 19, 2017 3:21 PM
These comments helped assuage dollar traders, who had been somewhat wary of the Fed’s hawkish stance given recent weaker-than-expected inflation and employment data. Since last week’s FOMC decision, the dollar has begun to stage a more meaningful rebound after having been heavily pressured for more than a month. The dollar’s latest attempt at a rebound has translated into what appears to be a rough topping pattern for EUR/USD.
Within the last month, EUR/USD has attempted to reach and breakout above the key 1.3000 psychological resistance level three times, only to be thwarted each time. The latest attempt was on the day of last week’s FOMC decision, which resulted in a dollar surge and EUR/USD pullback from resistance. That move formed a key reversal candlestick pattern – a shooting star candle, otherwise known as a pin bar – followed by a tentative breakdown below a key uptrend line extending back to April’s lows.
Though a EUR/USD rebound after that breakdown brought price action back up to the trend line, Monday’s resumed dollar strength pressured the currency pair back down again. Given EUR/USD’s failure to breach 1.3000 resistance and the subsequent trend line breakdown, dollar strength is currently driving downside momentum for EUR/USD. With any continued bullish momentum for the dollar and bearish momentum for EUR/USD off the breakdown, the next major target immediately to the downside is at the 1.1100 support level, followed further down by the key 1.1000 psychological support level.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.