Forex Technical Update
- The EUR/USD can be observed roughly rallying in a rising channel since August 11 from the 1.41-1.4120 lows.
- The 1.4420 and 1.4400 levels were important support and was cracked in the Asian session.
- In the European session an attempt to break back above a local pivot at about 1.4450 failed.
- Ahead of the US session, the market is breaking below the rising channel support near 1.4380.
- The RSI is also cracking the 40 level in the 1H reading.
- It is clear the market has flattened from the bullish mode. Now, the question is weather there is bearish impetus.
- We saw a strong bullish move from the 1.4325 pivot, so if the market breaks below that, we can say bears are truly in control in the short-term.
- the next support area in the near-term would be around the 1.4250-1.4270 level.
- Looking at the 4H chart, we see that if support is found here, we still maintain a bullish bias, as the market would be able to remain above the 200SMA. However, there is definitely a choppier element to the EUR/USD, where as the GBP/USD for example is offering much shallower retracements.
- Today, CPI data is likely to be monitored closely. There is lingering prospect of QE if inflation data is low enough. So if inflation is lower than the tepid expectation, the EUR/USD slide could be supported above the 1.4325 pivot. If that trips after the CPI data, we are clearly in the short-term bearish mode.
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Fan Yang CMT
Chief Technical Strategist