EUR/USD – Recovery losing momentum

Running into resistance

The dollar has given back a decent portion of its recent gains over the last couple of weeks and has now reached some very interesting levels.

The greenback correction has coincided with a hawkish shift from the ECB which has lifted the euro, making the impact on the EURUSD pair all the more significant.

But how much further can it run? It’s now reached a potentially significant area around 1.08 where the top of the steeper descending channel crosses the 50 and 61.8 fibs. A break above here could be very significant and a bullish signal.

Interestingly, the 4-hour chart suggests it’s already struggling. Not long after breaking the 200/233-period SMA for the first time in a few months, momentum indicators are flashing divergences with price action. Has the recovery run out of steam?

A move lower could see a significant test around 1.0650 where the 200/233-period SMA band coincides with early May resistance. A break below this could suggest a continuation of the trend that preceded the recent EURUSD recovery.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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