This article was originally published on Nadex.com.
The trend for the EUR/USD remains under pressure, but Bearish momentum is slowing. Fundamentally there is little to support the market. ECB policy is looking as though it will not make any changes to the path it has been following. Euro zone economic numbers are slowing, and the political climate is up for grabs. Trade war rumblings also keep this currency under pressure. And to add even more pressure to the EUR/USD there will be most likely more rate hikes by the U.S. Federal Reserve. Any one of these factors is enough to help Bearish selling pressure to prevail in the short term. Rallies in the short run are expected to be short lived profit taking moves.
Use the 1.1725 Directional Bias Pivot to help gauge direction for the EUR/USD. Below 1.1725 the currency maintains a Bearish posture. 1.1550 is the level to watch out for. A break under here may set a fresh slide in motion. Be careful buying into this break. Fresh selling has the potential to pile drive the EUR/USD towards the 1.1422 Support level. As long as the major fundamental influences are acting as they are it may be hard for a Bullish reversal to develop. There are more reasons to remain Bearish than Bullish moving forward.
Only a breach of the 1.1725 Resistance level reverses gears for the EUR/USD. A rally above this Directional Bias Pivot is necessary to help the Bulls get a rally that has the potential to build. Above 1.1725 the Bullish target is the 1.1854 Critical Pivot level. This level put a halt on the currency the last time it made a run up near these levels. A rally through 1.1854 may spark fresh buying that target’s the 1.1962 level. If the EUR/USD produces a corrective rally into this area then there may be enough fresh buying pressure to press new move Highs up towards the 1.2068 level. 1.2219 is the extended upside rally objective. Because of the fundamental factors impacting the EUR/USD it is not expected to hold a rally into these higher areas. Corrective moves to the upside have more of a failure potential then a solid corrective trend reversal unfolding. Even though Bearish momentum is slowing, only a serious tone change in the fundamental environment for this market is likely to create any long term Bullish trend.
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