The Start of a Downturn in EUR/USD?

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The Start of a Downturn in EUR/USD?

 

As indicated in our previous analysis of the popular EUR/USD pair, technical signals suggested a potential for a price decline, a scenario that ultimately materialised.
 

Although the overall trend on long-term timeframes, such as the weekly chart, remains bullish, the probability of a further decline in the upcoming candles persists as long as technical evidence pointing to a price top is not invalidated.
 

From a fundamental perspective, current conditions have led to a decline in investor confidence in the Euro, placing the primary currency under pressure in recent days. This is compounded by the resignation of the French Prime Minister, which has triggered political and financial instability and created challenges for France's fiscal policies. Meanwhile, signs of a recession are emerging in the Eurozone's largest economy, Germany, adding to the factors that are negatively impacting the Euro in the short term.
 

Technically, on shorter timeframes, such as the daily and 4-hour charts, the price is positioned below the 21-period moving average, and a suitable structure for an uptrend has not been observed. During its decline, the price is approaching the critical support level of 1.16000. A break below this level would reinforce the bearish sentiment, increasing the likelihood of the price reaching the next support level at 1.15100.
 

Conversely, a bullish scenario is also possible given the relatively oversold conditions on the 4-hour timeframe. If a confirmed price bottom forms on or near the key level of 1.16000, the price has the potential to correct upwards towards the resistance level of 1.16500 and, in a more extended move, up to 1.17000.
 

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