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Most Read:EUR/USD on Cusp of Major Breakdown as US Dollar Embarks on Strong Recovery
EUR/USD was virtually flat on Wednesday in early morning trading in New York, oscillating between small gains and losses around the $1.0768 mark, a sign of indecision amid market caution due to the U.S. debt ceiling standoff and growing fears of a potential technical default.
In the grand scheme of things, the euro remains biased to the upside over a medium-term horizon against the U.S. dollar, indicating that the recent pullback that has led to a nearly 3% drop from the May high may be part of a corrective movement within a broader uptrend.
Although the correction theory remains valid for now, the arguments in its favor have started to weaken, especially after the exchange rate broke below the 50-day simple moving average a few days ago, signaling a possible reversal.
of clients arenet long. of clients arenet short. Change in Longs Shorts OI Daily -2% -9% -5% Weekly 9% -18% -3%Related:Japanese Yen Setups - USD/JPY Muted After Breakout, AUD/JPY Forges Double Top
All hope is not yet lost, but to be confident in the EUR/USD's ability to resume its bullish run, the rising trendline that has guided the pair's advance since September 2022 must hold all costs. This dynamic floor, currently crossing 1.0765/1.0760, is likely the last line of defense against a deeper decline.
If bulls fend off the attack on 1.0765/1.0760 successfully and spark a turnaround, initial resistance appears near the psychological 1.0900 level, but further gains may be in store on a push above this ceiling, with the next upside target at the 2023 highs.
In contrast, if 1.0765/1.0760 caves in decisively, bearish impetus may gather pace, emboldening sellers to launch an assault on 1.0625, the next relevant support to keep an eye on. On further weakness, the focus shifts lower to 1.0500, the 38.2% Fibonacci retracement of the 2022/2023 rally.
EUR/USD Chart Prepared Using TradingView
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