EURUSD’s recent decline has paused around the 50-day moving average. Downside pressure has eased for now but the medium-term neutral phase that started a few months ago remains intact.
Looking at the daily chart, EURUSD was falling for five consecutive days and breached the 50-day MA before pulling back. Immediate resistance is expected at 1.1791 – the 23.6% Fibonacci of the rise from 1.0820 to 1.2091. A successful break to the upside would target 1.1900 and open the way for a re-test of the 1.2091 peak. From here there would be a resumption of the long term uptrend.
Momentum signals have dropped into bearish territory, suggesting there is not enough strength to push much higher for now. Dips are expected to find support in the 1.1600 zone, which is a round figure and also near the 38.2% Fibonacci level. Further downside risk is expected to be limited.
The short-term bearish phase has stalled but the overall outlook remains neutral and EURUSD is expected to trade sideways between 1.16 – 1.19. Only a drop below the 20-day MA would start to shift the positive bigger picture.
