Lower Highs Indicate Bearish Reversal Soon in EURUSD
The EUR to USD rate has seen significant gains since mid-April, but its upward momentum has slowed upon reaching resistance around 1.08 .
The EUR to USD rate has seen significant gains since mid-April, but its upward momentum has slowed upon reaching resistance around the 1.08 level, corresponding to key moving averages on the daily chart. Although EUR/USD briefly surged above 1.08 early this month, it faced rejection near the 100-day simple moving average (SMA) and subsequently dropped below this level. Despite positive developments such as the increase in Eurozone investor confidence and improvements in Services PMI, this forex pair continues to make lower highs, and reversing at 1.08 it seems like we’re going to see a bearish reversal and a retest of the lows around 1.05-06.
EUR/USD Chart Daily – Stochastic is Overbought
Earlier in May, the EUR/USD rate experienced a surge above 1.08, driven by various events including the Federal Open Market Committee (FOMC) meeting, where Powell dismissed the possibility of rate hikes, and the release of the US non-farm payrolls (NFP) report. However, the rise in University of Michigan (UoM) inflation predictions last week unsettled traders, who became concerned about potentially higher Consumer Price Index (CPI) readings expected this week.
Ahead of the weekend, hawkish remarks from Federal Reserve (Fed) policymakers aided the US Dollar (USD) in reclaiming some of its losses following Thursday’s disappointing Jobless Claims data. For the EUR/USD pair, it encountered robust resistance around the 1.0790-1.0800 level. Today we saw a push above 1.08, but buyers couldn’t make a new high above the high we saw early this month.
If the pair manages to establish stability above this level, subsequent hurdles may be found at 1.0830 and 1.0900. On the downside, the first level of support is located at 1.0750, corresponding to the 20-period Simple Moving Average (gray) on the daily chart, followed by 1.0720. These levels may act as support zones in case of a downward movement in the pair.
EUR/USD Live Chart
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