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Negative sentiment returned to dominate the movement of the Euro/Dollar pair towards the end of last week’s trading. Despite several attempts, the pair struggled to sustainably breach the psychological resistance level at 1.0700. As trading commences this week, the pair is seen exerting downward pressure, testing the support level at 1.0620.
Taking a closer look at the 4-hour timeframe chart, we observe the simple moving averages crossing downwards, exerting additional pressure on the pair from above. This bearish sentiment aligns with the loss of upward momentum indicated by the Stochastic oscillator.
Considering the daily trading activity remains below the resistance level at 1.0710, positioned around the 61.80% Fibonacci retracement level as depicted on the 4-hour chart, there exists a potential for continued decline. A breach below 1.0620 could facilitate a further downward movement towards anticipated targets at 1.0575 and 1.0520, with potential extensions towards 1.0430.
Conversely, a break above the aforementioned resistance zone of 1.0720/1.0710 could signal a reversal of the bearish trend, delaying the projected decline. In such a scenario, we might observe a temporary recovery, aiming to retest the level at 1.0770.
A word of caution: Today’s trading landscape is punctuated by the release of impactful economic data emanating from the American economy, notably the “Consumer Confidence Index.” Consequently, heightened volatility is anticipated upon the dissemination of this news.
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