EUR/USD: Oversold conditions warrant caution before placing fresh shorts – TDS

EUR/USD has managed to find some support around 1.19 as the pair ranks as one of the most oversold in the G10 right now. This suggests one might need a high level of conviction to enter fresh shorts at current levels, as Ned Rumpeltin, European Head of FX Strategy at TD Securities, notes.

Daily RSI now oversold

“EUR/USD managed to find some support around the 1.19 level late and has largely been rangebound since.”  

“While the 200-DMA (1.1998) is likely to provide a near-term cap, the next main support zone should be found in the 1.1835/60 area. We could see a bit more of an extension lower if the market has more work to do to exit stale longs.” 

“EUR/USD is among the most oversold G10 currencies right now — at least as measured by the daily RSI. All else equal, that suggests one might need a high level of conviction to enter fresh shorts at current levels.”