22, November 2016

EUR/USD (a 4-hour chart)

General overview

The euro slightly gained on the back of broad based dollar retracement. However, investors stood still awaiting for Draghi’s remarks in the evening. Moreover, growing political risks in Italy and France kept on weighing on the single European currency.

Current situation

The price seems to have met a strong barrier around 1.0550. The euro bounced off the level and regained some of its lost footing versus its American counterpart on Monday. Despite the current positive sentiment the European currency remained in the red and we consider the current rebound as corrective. The pair remained in a descending channel and bounced from its lower limit. Buyers struggled with sellers to take out the level 1.0650 ahead of the NY opening. According to the 1 hour chart prices broke the 50-EMA at the Europe open. All moving averages are heading lower. The resistance is seen at 1.0650, the support could be found at 1.0600.

Technical indicators continued to recovery from oversold levels, but within bearish territory. MACD grew which indicates the sellers’ positions weakening. Besides, we noted a bullish divergence of MACD in the 1 hour chart. The RSI indicator lost downward strength and headed north.

Trading recommendations

A minor dollar retracement triggered some profit taking move following the pair's recent decline. A further dollar weakness may extend the current euro recovery. The pair will maintain its bid tone if it consolidates above 1.0650. In the event that buyers manage to force the above 1.0650 the EUR/USD may extend its upside towards 1.0700.