EUR/USD Forecast: approaching double-top neckline support ahead of ECB minutes

Haresh Menghani FXStreet

The US Dollar has been gaining traction since the beginning of this week and was further supported by the latest FOMC meeting minutes, which revealed that policymakers were more inclined to keep raising interest rates gradually. In a knee-jerk reaction to the release, the greenback initially weakened but soon regained lost ground as the minutes were interpreted to be quite hawkish.

Meanwhile, the EUR/USD pair extended its retracement slide from 3-year tops, set last Friday, and weakened below the 1.2300 handle. Traders will now take cues from the upcoming release of German IFO readings ahead of the ECB monetary policy meeting accounts (minutes) and the usual weekly jobless claims data from the US.

From a technical perspective, the pair seems more likely to slide below 1.2240 intermediate level and gradually head towards testing the bearish double-top neckline support, near the 1.2200 handle. A convincing breakthrough the mentioned support would confirm the bearish chart pattern and with short-term indicators turning negative, the downfall could get accelerated towards the 1.2100 round figure mark en-route 1.2070-65 support area.

On the flip side, any recovery attempts back above the 1.2300 handle might now confront fresh supply near the 1.2330-35 region, which if cleared should trigger a short-covering rally back towards the 1.2400 handle.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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