Looking at the daily chart, EUR/USD continues to tease the long-term upwards moving trendline taken from the low of 3rd of January last year. The trendline is acting as a very good support for now, but bearing in mind the latest drop, we are cautious that the pair the pair could eventually break it to the downside, which would be a sign of a change in the long-term trend. But until that break happened, there is still a chance bounce back to the upside. Although the fundamentals suggest to us that this pair could continue drifting lower in the near term, we would stand flat from a technical standpoint and wait for a break below the long-term trend line before we get more confident on the downside.
A clear break and a close on the day below the aforementioned long-term trendline could mean that more bears are joining the game. Another good confirmation of a potential continuation to the downside would be a break and a close below the 1.1510 level, marked by the lowest point of May, which could initially aim for the 1.1450 barrier. Another dip below that level could carry more bearish implications and could set the stage for the 1.1300 zone.
On the upside, if the aforementioned trendline holds and we see a bounce from it, then keep a close eye on the 1.1650 area, which was near yesterday’s highs. A break of that area could give some hope for the bulls that EUR/USD could be recovering. Certainly, the pair would need to make another run towards the 1.1725 level, which if broken, could be seen as a positive and more bulls could start joining in and that could lead to a test of the 1.1850 zone.
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