EUR/USD Price Analysis: Bears take the Day-2 bulls to the cleaners
|- EUR/USD bears move in on day 3 of the weekly template and crush committed bulls.
- The day 2 trend traders were wiped out on Wednesday, but bulls are trying to reemerge.
The euro has come under pressure following a resurgence in the US dollar on Wednesday. The US dollar index, DXY, was last seen up 1% at 111.20 but it had been as high as 111.735. A tear in US yields has helped to prop up the US dollar as the money markets to price out overall optimistic speculation over a Federal Reserve pivot. The yield on the US 10-year note was up a high of 3.78%.
The following illustrates the price action across the assets resulting in the sell-off in the euro and offers scenarios for the rest of the week leading to the Nonfarm Payrolls event on Friday.
US yields
US dollar
The greenback, as measured by the DXY index, has consequently rallied on the day but corrected into a support that would be expected to see the index extend the bullish correction and move in on the 112 level.
However, should the index's support crumble, the euro will start to correct the recent sell-off significantly:
EUR/USD weekly template
The price has followed a 1,2,3 day count and has potentially put in a high for the week at resistance, as illustrated on the chart above. The price broke out of the front side of the trendline support on day 2 and crumbled on day 3 putting in a peak formation in Asia following two days of rising from the low of the week, so far.
EUR/USD H1, zoomed
We are waiting for this week's Nonfarm Payrolls, NFP, on Friday, but the price action is teeing up a move higher given the low's pin and the hourly W-formation that has formed. A restest into the neckline, or close to it, can be expected and is already underway. Thereafter, the bulls could be encouraged for a move up towards 0.9920 with the price creeping out of the front side of the trendline resistance.
If, on the other hand, the bears stay the course, on a break of 0.9800, we will be looking at a move towards the week's lows at 0.9752:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.