- EUR/USD drops despite a bull cross of major moving averages/
- Momentum indicators signal deeper losses could be in the offing.
EUR/USD fell nearly 1%, as widening US-German yield differential and the resurgence of coronavirus cases across the Eurozone weighed over the common currency.
The weekly drop contradicted the bullish crossover of the 50- and 100-week simple moving averages. That's hardly surprising, as longer duration SMA crossovers are based on backward-looking data and lag prices. More often than not, crossovers trap traders on the wrong side of the market.
The pair looks set to extend last week's decline with the daily chart reporting a failed bearish channel breakout, a bearish signal, and the weekly chart MACD histogram printing a deeper bar below zero, a sign of the strengthening of downward momentum.
Support is seen at 1.1688 (Thursday's low) and 1.1608 (100-day SMA), while resistance is located at 1.1752 (10-day SMA) and 1.18 (psychological hurdle).
Weekly chart
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Trend: Bearish
Technical levels
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