EUR/USD – Hovering Below the Ascending Regression Channel- Is it time for a reversal?
EUR/USD Fundamental Analysis
On Monday, the currency pair EUR/USD tried to regain its previous losses despite the strength of the US dollar. However, the near-term technical outlook of the EUR/USD forex currency pair suggests a lack of buyers’ interest in the market.
The current surge in price could be attributed to the positive Spanish CPI report for January. The inflation figures from Spain surpassed the expectations of 4.9% and were reported as 5.8% this month. The positive data backed the hopes for slowdown rate hikes from ECB in the upcoming meetings. Hence, the shared currency rose in the European Trading session.
Meanwhile, the US dollar Index (DXY), which measures the value of the greenback against the basket of six major currencies, was also strong. The risk-averse market sentiment was giving power to the US dollar against its rival currencies. There is no economic data scheduled for today from the US side, so the pair might move in the same direction as it is moving for the rest of the trading sessions.
EUR/USD Technical Analysis
The short-term technical outlook of the EUR/USD H4 chart suggests that the bullish trend of the pair might be at its end. EUR/USD has broken below the ascending regression channel that started in the early days of January. The lower region of ascending channel has been playing a critical support level for over a month. However, the closing of last week’s ending candlestick below this line triggered signs of reversal.
The Stochastic Oscillator and Williams Percentage R both indicators confirm that the currency pair has reached the overbought zone. It means a possible reversal is imminent in the near-term outlook.
Currently, the price is facing rejection at 20-Day Simple Moving Average (SMA) yellow line. The 50-Day SMA (pink line) is also supporting the currency pair at the 1.0865 level. Any break below this level will trigger a sharp bearish trend that might face further support at 1.08352. The following support is provided by the 100-Day SMA (orange line) at the 1.0808 level.
On the other hand, the bullish scenario suggests that moving past the yellow line (20-DAY SMA) could support the pair for further gains. The next resistance might stand at 1.09278.
In short, there are more chances of a trend reversal in the short term than the chances of trend continuation. Therefore, buyers are losing interest in the currency pair as of now.
EUR/USD Daily Technical Levels
Pivot Point: 1.0868