The EUR/USD has continued to lose value and is testing long-term support as price velocity downwards has quickened.
Perception is a large part of Forex trading and the EUR/USD is within the grips of a sincere bearish trend. On the 25th of May, 2021, the EUR/USD was trading near the 1.22600 vicinity, and as of this morning the pair is trading within sight of 1.13100. A strong spike lower very early in the morning actually saw the EUR/USD trade near the 1.12600 ratio briefly. Price velocity within the EUR/USD has been abundant and is making the trading of the Forex pair dangerous, so traders’ need to be careful.
Current support levels may be the 1.13000 to 1.12900 marks, and if they prove vulnerable the spike lower experienced early this morning may prove to be a significant warning. Certainly the EUR/USD is capable of reversals higher and natural cycles are always abundant, but selling momentum has been demonstrative.
Technically and fundamentally there seems to be a rather intriguing mixture of negative sentiment which is helping the EUR/USD test lows not seen since July 2020. If the EUR/USD continues to break beneath support levels, there is reason to suspect the 1.12500 level could prove to be a critical lynchpin near term. However, traders should not get overly ambitious. The EUR/USD is the world’s largest currency pair via its transactions, and financial houses may be tempted to try and position themselves for sudden reversals.
The combination of perceived hawkish rhetoric from the U.S. Federal Reserve compared to the more dovish European Central Bank is not helping bullish sentiment within the EUR/USD. In addition to this slice of fundamental consideration is the acknowledgement that Germany and other locations in Europe seem to be facing a growing outbreak of coronavirus, which threatens to put a damper on consumer spending during the holiday season. Technical traders may not want to hear this news and consider it noise, but it may explain the amount of price velocity which has caused the EUR/USD to sink lower the past twelve hours.
Current resistance levels are nearby for the EUR/USD, and speculative sellers who continue to have short-term negative sentiment may believe the 1.13150 to 1.13200 levels may be a good place to ignite short positions if they believe the pair will again trade lower. Traders who want to wager on reversals higher should not over extend their targets, certainly the EUR/USD can produce upwards movement, but the rather strong bearish trend that has been exhibited the past couple of days may have further room to flourish.
EUR/USD Short-Term Outlook
Current Resistance: 1.13170
Current Support: 1.13000
High Target: 1.13300
Low Target: 1.12510