The EUR/USD currency pair is retracing its recent gains, trading around 1.0810 during the Asian hours on Tuesday. A review of the daily chart indicates that the pair is testing the upper boundary of a descending channel pattern, reinforcing a bearish outlook.
The 14-day Relative Strength Index (RSI), a key momentum indicator, is slightly above the 30 level. A drop below this threshold would suggest an oversold condition, potentially paving the way for an upward correction in the EUR/USD pair in the near term.
Additionally, the nine-day Exponential Moving Average (EMA) is positioned below the 14-day EMA, confirming the prevailing bearish trend. The short-term price momentum remains weak, indicating that downward pressure on the pair may continue.
On the downside, immediate support is identified at the psychological level of 1.0800, which aligns with the upper boundary of the descending channel. If the price retreats into this channel, it could heighten the likelihood of a decline toward the next psychological level at 1.0600.
A break below 1.0600 would likely amplify selling pressure, potentially pushing the EUR/USD pair further down to test the lower boundary of the descending channel, estimated at around 1.0680.
In terms of resistance, the pair may encounter an immediate barrier at the nine-day EMA, currently around 1.0826, followed by the 14-day EMA at 1.0855. A breakthrough above these EMAs could lead the pair to approach the psychological level of 1.0900.
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