EUR/USD analysis: shallow correction didn't affect the dominant bearish trend

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1604

German coalition probed fragile over immigration policies, EUR to keep suffering.
US-China trade war weighing on high-yielding assets in the absence of other news.

The EUR/USD pair corrected higher in a dull Monday but stalled a couple of pips below Friday's high before retreating modesty, having spent most of the last two sessions of the day confined to a tight range around the 1.1610 region. The weekly opening saw risk-off dominating the financial boards amid escalating tensions between the US and China over the new tariffs on each other's imports imposed during the weekend. The negative sentiment paused after London's opening, and while equities remained in the red, high-yielding EUR turned comatose. The absence of relevant macroeconomic releases added to the quietness of the pair as investors take a breath following quite an intense week.

Tuesday will a bit more interesting from the macroeconomic side, as the EU will release its current account April figures alongside with construction data for the same month, while the US will release Housing Starts and Building Permits for May. In the middle, ECB's head Mario Draghi is scheduled to speak, although he will be presenting some academic notes within the ECB Forum on Central Banking, in Portugal, and chances that he says something relevant are quite a few.

The 4 hours chart for the EUR/USD pair shows that the bearish bias remains strong, as it is developing well below a bearish 20 SMA which extends its decline below the larger ones, while technical indicators remain within negative levels, the Momentum still aiming north, but the RSI having already resumed its decline, all of which reflects the absence of buying interest. The pair remains close to its yearly low of 1.1509, with a break below the level expected to fuel the dominant bearish trend. Upward movements up to 1.1715, the 23.6% retracement of the weekly decline between April and May, will be considered corrective, with selling interest probably adding on approaches to this last.

Support levels: 1.1580 1.1540 1.1505

Resistance levels: 1.1630 1.1675 1.1715

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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.

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