EUR/USD Technical Analysis: Euro Struggles to Extend Rebound

EUR/USD TECHNICAL ANALYSIS: BEARISH

• Euro break of 2-week resistance struggling for follow-through
• Overall chart positioning still argues for a bearish trend bias
• Sentiment studies bolstering the case for a downside scenario

The Euro found support below the 1.08 figure and pushed higher, taking out resistance at a falling trend line guiding it lower against the US Dollar for nearly two weeks. The pair managed to probe above the 1.09 figure once again but follow-through is seemingly struggling to materialize, with prices now testing back below resistance-turned-support in the 1.0854-48 area.

A confirmed break below that puts the latest swing bottom in the 1.0767-71 zone back in play. Establishing a foothold back below this barrier might open the door for another challenge of the late-March bottom in the 1.0633-52 region. The outer layer of immediate resistance is at 1.0925. A turn higher that breaks this barrier puts the 1.0980-91 area – marked by a falling trend line and the late 2019 bottom – back in play.

EUR/USD 4-hour chart created with TradingView

EUR/USD TRADER SENTIMENT

Retail positioning data shows 61.9% of traders are net-long, with the long-to-short ratio at 1.62 to 1. IG Client Sentiment(IGCS) is typically used as a contrarian indicator, sothe net-long skew in traders’exposure suggests that EUR/USD is biased downward. Furthermore, traders are more net-long than they were yesterday and a week ago, which argues for firming conviction in a bearish scenario.

See the full IGCS sentiment report here.

EUR/USD TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter