The EUR/USD pair pauses its recent downward momentum during the Asian session on Tuesday, trading near 1.0250. However, technical indicators and the broader trend suggest that bearish pressures remain dominant.
Technical Overview
Descending Channel and Trend Indicators:
Descending Channel: The pair continues to trade within a well-defined downward-sloping channel, emphasizing sustained bearish momentum.
Exponential Moving Averages (EMAs):
9-day EMA: Acts as immediate resistance at 1.0290.
14-day EMA: Reinforces resistance at 1.0318.
EUR/USD remains below both EMAs, indicating weaker short-term momentum.
Relative Strength Index (RSI):
14-day RSI: Recovery above the 30 level signals a bounce from oversold conditions, but it remains in bearish territory, limiting bullish conviction.
Key Support Levels:
1.0177: The 26-month low recorded on January 14.
1.0000: Psychological support; a critical barrier to further downside.
0.9890: Lower boundary of the descending channel; a decisive break here would amplify bearish sentiment.
0.9730: November 2022 low and a significant bearish target.
Key Resistance Levels:
1.0290: Immediate resistance near the 9-day EMA.
1.0318: Additional resistance at the 14-day EMA.
1.0400: Upper boundary of the descending channel; a critical level to watch for signs of a trend reversal.
1.0630: December 6 high, marking the upper limit of a potential bullish breakout.
Fundamental Context
US Dollar Strength: The US Dollar remains firm on the back of robust economic data, including the US Nonfarm Payrolls report, which supports a less aggressive Federal Reserve rate-cut outlook in 2025.
Eurozone Economic Challenges: Persistently weak growth and inflation concerns weigh on the Euro, further limiting its upside potential.
Upcoming Data: The US Producer Price Index (PPI) scheduled for release later today will provide further clues about inflation trends and could impact the EUR/USD pair’s trajectory.
Conclusion
The EUR/USD pair remains under pressure within its descending channel, with resistance at 1.0290 and 1.0318 capping potential short-term recoveries. The primary focus for bears is a retest of the 1.0177 level, with further declines toward 1.0000 and 0.9890 if the selling persists. Bulls need a sustained breakout above 1.0318 to target 1.0400 and potentially reverse the bearish trend.
Traders should closely monitor key data releases and sentiment around US monetary policy for near-term direction.
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