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Technical Analysis of EUR/USD

As suggested in yesterday’s analysis, EUR/USD fell on Tuesday after the release of stronger than expected retail sales data and the lack of reference to a third quantitative easing from the Fed. The negative sentiment is pushing the pair lower this morning and it is currently hovering around the 1.30 level, after breaking below 1.3083, the 23.6% Fibonacci level from August’s high to January’s low. The 1.31 level has recently proved to be strong support all the way down to 1.29. The pair remains bearish overall but the bears are expected to find strong resistance at the current level. From a technical point of view the signs are negative both in the long-term and in the short-term. With the MACD flipping over zero, a bearish line capping RSI on the hourly chart and a bearish alignment of moving averages on the daily chart the pressure continues to be on the downside.
EUR/USD Daily Chart

On the hourly chart, the crossing of the 50EMA by the 20EMA on Tuesday materialised in a significant downward movement, with the bulls trying to regain the control at the time of writing, pushing the pair higher to 1.3066. From here, a break below next key support by 1.2975 is required to officially accelerate declines back towards the 2012 lows at 1.262. Should the US Dollar index remain at its current high levels above 80.00, the EUR/USD could extend the losses sooner rather than later. In the alternative scenario, a break back above 1.3300 could alleviate downside pressure and allow for some upward movement.
EUR/USD Hourly Chart

Dafni Serdari
Market Analyst
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