As we can see on charts EUR/USD has been moving inside a descending channel, and considering the current situation in the eurozone we can say that technical analysis and fundamentals are pointing the same direction. Therefore, EUR/USD is expected to continue moving inside this descending channel.
However market sentiment is very important as well. I would like to remind the price action last Friday, after NFP announcement. EUR/USD climbed after even though the U.S. jobs data came out much better than expected.
Technical analysis and the recent price action suggest that the pair may head back to 1.3100-1.3050 levels unless it can break 1.3500 resistance. If we get very good news from the eurozone and if the pair can pass this barrier, we may see 1.3600-1.3680 printing on our charts.
According to the charts, this week’s price range will be between 1.5350 and 1.5750. Even though the general long term outlook is still bearish, if the pair can break 1.5660 and 1.5750 resistances it will head to 1.5960. A close below 1.5350 support would hasten its way to 1.5100.
However, as I mentioned in EUR/USD analysis, market sentiment is important to predict future price movements in the forex market. Let’s look at the smaller time frame charts to see what happened on Friday:
Moody’s downgraded 12 U.K. financial institution and GBP is going higher? Nice U.S. jobs data and GBP is still going higher? Hmmm…It is better to be cautious as speculators’ short positions were at extreme levels recently, so they may cash their profits to protect their gains. You can check our CoT report for detailed charts.
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