EURUSD is slightly above the mid-Bollinger band and appears set to continue its one-month consolidation in the vicinity of the 1.1300 handle. That said, downside risks remain, something also being mirrored in the falling simple moving averages (SMAs), which are defending the bearish bearing.
The short-term oscillators are indicating that negative momentum has softened. The MACD is rising above its red trigger line closing in on the zero mark, while the RSI is toying with the 50 neutral threshold, showing that bullish drive is vulnerable. Moreover, the positively charged stochastic oscillator is hinting that buying power is starting to fade.
Noteworthy is the squeeze in the Bollinger bands, which is signalling that a surge in volatility is expected, which suggests a larger directional move may evolve.
If the pair’s positive pressures diminish further and the price slides underneath the mid-Bollinger band at 1.1300, sellers could face initial downside constraints around the 1.1235 barrier, where the lower Bollinger band also resides. In order for the decline to resume, sellers would need to break below the 1.1146-1.1200 support border, reinforced by the lows of June 2020 and the near 17-month trough of 1.1185. Should this floor of the fresh range happen to give way, sellers could target the 1.0986-1.1017 region, formed over the mid-April to mid-May 2020 period. If selling forces dominate, the bears could then aim for the trough of 1.0870, identified in May 2020.
Alternatively, in order to underpin buyers’ confidence, the price would need to surpass the upper Bollinger band at 1.1360 and the adjacent 1.1370-1.1400 resistance boundary. Climbing from here, the 1.1500-1.1553 resistance section may attempt to impede buyers from gaining ground towards the 1.1608 and 1.1692 highs respectively.
Summarizing, even though EURUSD is lacking strong directional momentum, bearish risks endure as the price persists beneath the SMAs and the 1.1400 handle.
