EURUSD is neutral to bearish in the short term after breaking below its 50-day moving average. The broader uptrend from the April low of 1.0820 ran out of steam at the September 8 high of 1.2091.
Following three consecutive days of losses, EURUSD stabilized in the lower 1.1700 handle and is being capped by the 50-day MA at 1.1845. Despite the recent rebound off 1.1716, the risk is still tilted to the downside since RSI is in a downtrend and has crossed below 50 into bearish territory. MACD is downward sloping and fell below zero, suggesting there is scope for more downside in the market.
Immediate support is expected at 1.1661 (August 17 low). A break below this level would likely bring about more weakness in the market for a move to 1.1471, which was an area of congestion recently and acted as both support and resistance during July. This level is also near the 50% Fibonacci of the upleg from 1.0820 to 1.2091. A deeper fall from this point would see the start of a reversal of the April to September uptrend.
A move back above the 50-day MA and 1.1900 resistance would improve the odds for a re-test of the 1.2091 top and would see a resumption of the uptrend that started from 1.0820.
As long as EURUSD trades above 1.1661 and below 1.2091, the pair would maintain a neutral bias in the short term. The deteriorating momentum indicators are keeping risk to the downside.
