EUR/USD has been trading in a sliding mode since Tuesday, when it hit resistance near 1.1745, the upper bound of the short-term sideways range it had been trading within from the 10th of July until yesterday. It dipped below 1.1620, the range’s lower bound, yesterday and continued drifting south to break below 1.1600 as well. In our view, this may have turned the short-term outlook somewhat negative, but from a medium-term perspective, we maintain our flat stance. The pair is still trading within the bigger range, between 1.1520/30 and 1.1830/50, which has been in place since the 15th of May.
In our view, the dip below 1.1600 may have opened the way towards the lower end of the broader range, near the 1.1520/30 territory. That said we would like to see a clear and decisive close below that zone before we start examining whether the medium-term outlook has turned negative as well. Such a dip would confirm a forthcoming lower low on the daily chart and could initially pave the way towards our next support zone of 1.1480, defined by the low of the 20th of July 2017.
Shifting attention to our short-term oscillators, we see that the RSI edged south and dipped below 30, while the MACD lies below both its zero and trigger lines. These indicators detect downside speed and support the case for further declines, at least towards the 1.1520/30 area. That said, the RSI has started to flatten below 30, while the MACD may have started bottoming, signs that make us cautious of a possible corrective bounce before the bears decide to shoot again.
A move back above 1.1600 could confirm the case and may challenge the 1.1620 barrier as a resistance this time, from where the bears could jump back into the action and drive the rate down. If the 1.1620 obstacle fails to stop the rate from rising further, then we will switch back to flat as EUR/USD will return within the aforementioned short-term range. A move above 1.1620 could initially aim for the 1.1650 level, the break of which could see scope for upside extensions towards 1.1700.
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