EUR/USD: downward trend is preserved

 

Current trend

The euro significantly strengthened against the dollar in the second half of August.

At the end of last week, the pair managed to reach the key resistance level of 1.1730, stopped at it and headed down. On Monday, the instrument gained 40 points in several hours and is currently traded at 1.1650. Today’s publications on the consumer price index failed to support the pair: the data only confirmed the forecast.

During the day, one should focus on the speech of ECB representatives. At the end of the week, the main data will come out – releases on the US labor market, the construction sector, and the main indices.

Support and resistance

In the medium term, the pair will move into a broad lateral channel and will continue to trade within the range of 1.1730–1.1500. Taking the key resistance level 1.1730 in the short term is unlikely due to the lack of catalysts for EUR strengthening. At the end of the year, demand for USD will only grow amid an increase in the likelihood of tightening monetary policy and raising the key interest rate by the Fed. So, the pair may continue falling to the levels of 1.1430, 1.1300 with the possibility of testing new lows (1.1115, 1.1000).

 

Technical analysis indicators on W1 chart and above confirm the forecast: MACD indicates the preservation of the high volume of short positions, and Bollinger Bands are pointing downwards.

Support levels: 1.1615, 1.1600, 1.1575, 1.1550, 1.1525, 1.1510, 1.1500, 1.1430, 1.1370, 1.1300.

Resistance levels: 1.1665, 1.1690, 1.1715, 1.1775, 1.1800, 1.1830, 1.1900.

Trading tips

In this situation, short positions may be opened from the current level; pending orders can be opened from levels of 1.1700, 1.1730 with targets at 1.1550, 1.1500 and the stop loss at 1.1780.

Euro vs US Dollar

Buy Sell Spread
1.16767 1.16745 22

Scenario

Timeframe Weekly
Recommendations SELL
Entry Point 1.1659
Take Profit 1.1550, 1.1500
Stop Loss 1.1770
Support levels 1.1300, 1.1370, 1.1430, 1.1500, 1.1510, 1.1525, 1.1550, 1.1575, 1.1600, 1.1615, 1.1665, 1.1690, 1.1715, 1.1775, 1.1800, 1.1830,

Alternative scenario

Recommendations SELL LIMIT
Entry Point 1.1700, 1.1730
Take Profit 1.1550, 1.1500
Stop Loss 1.1780
Support levels 1.1300, 1.1370, 1.1430, 1.1500, 1.1510, 1.1525, 1.1550, 1.1575, 1.1600, 1.1615, 1.1665, 1.1690, 1.1715, 1.1775, 1.1800, 1.1830,

EUR/USD: downward trend is preserved

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