EURUSD was sliding towards the critical 1.0000 level during Monday’s early European trading hours, which the bears could not successfully claim in mid-July. The move comes after the failure to climb above the 20-day simple moving average (SMA) and the 1.0200 number last week.
Previously, the pair could not find enough buyers to exit the 2022 downward-sloping channel either, with the momentum indicators currently foreseeing more bearish episodes ahead. Although the price closed marginally below the lower Bollinger band on Friday, signaling oversold conditions, the stochastics have yet to post a bearish cross below 20, while the RSI has some distance to run till the 30 mark. The MACD also seems to be starting a new bearish wave below its red signal line.
If sellers manage to dominate below parity, violating the support line at 0.9915 too, which connects all the lows from August 2018, the downtrend could gain significant momentum towards the 0.9780 – 0.9700 constraining zone last active during the 2000-2002 period. The channel’s bottom line is also in the neighborhood, adding extra importance to the region. Should the negative outlook further worsen from here, the spotlight will immediately shift to the September 2002 trough of 0.9600.
Otherwise, another bounce on 1.0000 may initially push for a close above Friday’s resistance at 1.0094 with scope to reach the 1.0157 – 1.0206 border, formed by the 50% and 38.2% Fibonacci levels of the latest upleg. The area also encapsulates the 20-day SMA and the lower limit of the Ichimoku cloud. Hence, any violation of this territory could send the pair directly up to the 50-day SMA currently lying around the 23.6% Fibonacci of 1.0266 and the channel’s upper limit at 1.0294.
In brief, the ongoing bearish wave in EURUSD is expected to persist in the short term, with traders likely waiting for a clear break below the 1.0000 – 0.9915 area to further reduce exposure in the market.
