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EURUSD Falls into Bearish Control

EURUSD traded muted near Friday’s one-month low of 1.0847 early on Friday after suffering its worst week since mid-September, having retreated from a one-year high of 1.1094.

Technically, the bears pressed the price below key trendlines and beneath its 20- and 50-day exponential moving averages (EMAs), dampening hopes for a bullish continuation. The weekly chart is also witnessing a negative tendency as the pair seems to have completed a bearish doji candlestick pattern after failing to crawl above its 200-weekly EMA.

Also, with the RSI trending lower below its 50 neutral mark and the MACD decelerating below its red signal line, the pair might be at risk of another downside correction. If this proves to be the case, the price may tumble towards the 1.0760 constraining zone, while lower, it may test the 1.0700 psychological level before meeting the 200-day EMA and the support trendline from September’s lows near 1.0630. The 38.2% Fibonacci retracement of the 2020-2022 downtrend is in the neighborhood too around 1.0600. Hence, a clear step below the latter point might add more fuel to the sell-off.

Alternatively, a bounce back above 1.0886, where the 50-day EMA intersects the broken support trendline, may lead the price up to the 23.6% Fibonacci mark of 1.0940 and the 20-day EMA. Then, the bulls will need to tackle the tough barrier of 1.1025-1.1094 in order to advance towards the March 2022 peak of 1.1184.

In brief, EURUSD is expected to resume its negative momentum in the short term, likely revisiting the 1.0700 zone. Otherwise, a successful move above 1.0886-1.0940 is required to shift the focus back to the upside. 

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