We start another week in the currency markets, after ending the previous week on 4/13 with USD strength seen across the board. The daily EUR/USD chart shows the market stopping the rally near 1.32, and starting the 4/16 Asian trading session falling below last week's low near 1.3025, and about to test the 1.2970-1.30 support zone.
Bears are not cleared yet, as the daily chart still shows the RSI above 40, without a convincing break or a triangle. However, price action failing to reach triangle resistance and falling from close to the middle of the triangle shows that bears have more control within this consolidation and suggests more likelihood there will be a break to the downside.
The 4H EUR/USD chart shows development of persistent bearish momentum as the RSI failed to break back above 60 after it has tagged 30. Price action is described as a choppy rally up to 1.32 which respected the 200 4H SMA, and was followed by a sharp drop to fall below the low near 1.3025. These are clues also suggesting the market has very bearish intent toward the 1.2970-1.30 support zone.
Before breaking below 1.2970, if there is a pullback, but the market fails to break back above 1.31, we can still consider the market in a bear trend with intent to break below this key support pivot.
If the market can fall below 1.2970 , and a subsequent pullback fails to push back above 1.30, we will have a clear trend to start the week toward 1.2880 pivot area, then the 2012 low near 1.2625.
We have some US macro data coming out this week. The USD is more in tune with its economy and not just moving at the ups and downs of risk sentiment, so the retails sales and empire manufacturing data on Monday can help trigger the break.
From the European front, high Spanish yields can reflect worries on Spanish debt. On 4/13, Spanish 10-year yields hit 6%. If this goes above 6%, it should be coincident with a weakening Euro.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.