EURUSD Retreats Sharply: Downtrend Reasserting or Bullish Hopes Dashed?

EURUSD has suffered a significant setback after failing to overcome a key hurdle. This analysis examines the technical situation and explores potential scenarios for the currency pair.

EURUSD Rejected at Resistance:

  • Failed Breakout Attempt: EURUSD recently attempted to break above the resistance of the falling trend line on the 4-hour chart. However, this effort proved unsuccessful, and the price has dropped sharply.

Sharp Decline Breaches Support:

  • 1.0790 Support Broken: The decline not only halted the uptrend attempt but also saw a breach of the initial support level at 1.0790. This development strengthens the bearish outlook.

Crucial Support Test Ahead:

  • 1.0724 Next Support Level: The immediate focus shifts to the next support zone at 1.0724. This level previously acted as a support floor in March.
  • Downside Targets if Support Breaks: A breakdown below 1.0724 could trigger further downside movement. The next potential target zones to watch could be around the February 14th low of 1.0694 and even lower at the 1.0650 area.

Limited Upside Potential:

  • 1.0790 Initial Resistance: While the focus is on the downside, it’s important to acknowledge potential resistance areas. A bounce in the near future would need to overcome the initial resistance at 1.0790 before retesting the falling trend line.

Overall Sentiment:

The technical outlook for EURUSD has turned decidedly bearish in the short term. The failed breakout and the support break at 1.0790 suggest a continuation of the downtrend. Close monitoring of price action around the 1.0724 support level will be crucial in determining the next leg of the move.