EUR/USD - Is a long-term trend reversal on the cards?

Omkar Godbole FXStreet Contributor

The EUR/USD pair found takers at 50-DMA level of 1.0888 in Asia. The trend line sloping downwards from Apr 2016 high and Nov 2016 high is seen offering resistance around 1.1020. A break above the same would signal the sell-off from April 2016 high of 1.1616 has ended i.e. trend reversal.

Eyes FOMC statement

The break above the trend line depends on the tone of the Fed policy statement. The CME data shows the June rate hike probability stands at 70%. This means a hint of a June rate hike would not shock markets, but nevertheless could yield a US dollar rally.

However, the odds of the pair taking out the trend line hurdle at 1.1020 would drop sharply if the Fed statement talks about the scope for reduction in the balance sheet this year.

An uptick in the preliminary Q1 GDP could push the spot higher to 1.10-1.1020 levels; however, a sustained break above the key resistance depends on the Fed’s tone.

EUR/USD Technical Levels

The pair was last seen trading around 1.09235. Multiple resistance levels are seen in the range of 1.0991-1.1020 (1.0991 is 10-DMA), 1.10 is zero figure, 1.1020 is the trend line hurdle). A daily close above the same would open up upside towards 1.1252 (Aug 2016 low).

On the other hand, a breakdown of support at 1.0888 (50-DMA) would expose 1.0750 (5-DMA) and 1.0723 (10-DMA).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bullish	Neutral	Low
1H	Bullish	Overbought	Expanding
4H	Slightly Bullish	Overbought	Low
1D	Bearish	Overbought	High
1W	Bullish	Neutral	Low
Updated May 3, 03:00 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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