EUR/USD is charting a double bottom reversal, risk-off could weigh on the USD
- US' trade war with the rest of the world and the resulting risk aversion in US stocks could hurt the greenback.
- The EUR/USD is charting a double bottom pattern with neckline hurdle of 1.1852.
The EUR/USD rose to a 12-day high of 1.1721 in Asia and could rise further towards 1.1852 (double top neckline) as the trade fears and the resulting risk aversion in the US stock markets could keep the greenback under pressure.
On Monday, the Dow Jones Industrial Average (DJIA) closed below the 200-day moving average (MA) - the first daily close below the long-term moving average since July 2016 on trade-related uncertainty. Reports hit the wires in Asian session yesterday that US is planning to block Chinese investments in US technology firms.
Further, mixed messages from Mnuchin and Navarro regarding curbs on Chinese investments only bolstered the uncertainty, pushing the VIX index (uncertainty/fear gauge) to a high of 19.61 yesterday. Also, the index closed well above the psychological level of 15, signaling the risk-off tone may strengthen in the week ahead.
Consequently, the greenback may remain on the back foot. Further, the rise in EUR/AUD and EUR/NZD could keep EUR/USD better bid. At press time, the currency pair is trading at 1.1712.
EUR/UD Technical Levels
Resistance: 1.1727 (4H 200MA), 1.1784 (Descending/bearish 10-day MA), 1.1838 (bearish 50-day MA).
Support: 1.1699 (session low), 1.1649 (5-day MA), 1.1625 (200-hour MA).
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
