EUR/USD back below 1.1000 level, Brexit uncertainty continues to weigh

Haresh Menghani FXStreet

The shared currency remained well offered against its US counterpart, with the EUR/USD pair now dropping back below 1.1000 handle ahead of US goods trade balance and flash version of Markit services PMI print.

A fresh wave of risk-aversion seems to have hit global financial markets in the past couple of hours, extending further support to the already stronger US Dollar and eventually dragging the EUR/USD pair lower.

Following Friday's unexpected outcome from the UK-EU referendum, global risk-off has been the key factor boosting safe-haven appeal of the greenback. Adding to it, Breixt is now seen fueling speculations that other member countries might also follow suit to leave the EU, raising questions over the fate of the European Union.

In the meantime, a period of prolonged political, economic and financial uncertainty in the UK might continue boosting demand for traditional safe-haven currencies, including the US Dollar, leading to extension of the pair's near-term weakening trend.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "As for the technical picture, the EUR/USD pair 4 hours chart shows that the price has just filled the gap left at the weekly opening, and trades around 1.1060, overall aiming to correct higher but maintaining the bearish tone, as the technical indicators are barely bouncing from extreme readings, whilst the price remains far below its moving averages. 1.1085, the daily high, is the immediate resistance, with a recovery above it probably targeting 1.1120, a strong static resistance. Further advances beyond this last, should see the pair extending up to 1.1160."

"The immediate support is 1.1025, and renewed selling pressure below it should see the pair testing the mentioned daily low at 1.0983, en route to Friday's low of 1.0910."

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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