EUR/USD analysis: bearish breakout around the corner
EUR/USD Current price: 1.1841
The common currency had a rough day, falling down to 1.1832 against the greenback, to end the day not far above the level. The EUR was hit at the beginning of the week by the outcome of German's election, as Merkel's party got a minor victory, with 33% of the votes, while the far-right AfD got 12.6%, making it to the Parliament for the first time since WWII. Merkel, will now to have to form a coalition to govern Germany, particularly after the SPD leader, Martin Schulz who came in second with a 20.5%, ruled out the possibility of a coalition with Merkel's CDU party. Also, the German IFO survey showed that German manufacturers ramped up their investment in September, but not to the extent originally planned. Business climate was down to 115.2 in September, from a previously revised 115.7 and against the 116.00 expected. There were no big headlines coming from the US, but escalating tensions between the country and North Korea triggered demand for safe-haven assets in the US afternoon, dragging the pair further lower, after North Korean foreign minister Ri Yong Ho said that US Trump's comments over the weekend were clearly a declaration of war.
This Tuesday, US Fed Yellen is due to deliver a speech titled "Inflation, Uncertainty, and Monetary Policy" at the National Association for Business Economics Annual Meeting, in Cleveland, but seems unlikely she would offer something that can surprise market players, after last week's statement. Technically, the pair is poised to extend its decline, back near the key support around 1.1820/30, where the pair bottomed these last few weeks. The 4 hours chart shows that the price broke below a daily ascendant trend line coming from mid August, which converges with the 200 SMA around 1.1885, making of the level a strong intraday resistance for the upcoming sessions, whilst in the same chart, technical indicators maintain a strong bearish momentum near oversold territory, supporting a bearish breakout of the August/September range.
Support levels: 1.1820 1.1775 1.1730
Resistance levels: 1.1885 1.1930 1.1965
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
