EUR/USD technical analysis: Hits lowest since May 31, eyes 1.11

EUR/USD drops to lowest since May 31 on dovish ECB expectations.
The daily chart shows a bear flag breakdown.

Omkar Godbole FXStreet Contributor

EUR/USD is currently trading at 1.1144, the lowest level since May 31, and could slide further toward 1.11 during the day ahead.

The bearish bias is due to an inverted flag breakdown, a bearish continuation pattern, seen on the daily chart. An inverted or bear flag often accelerates the preceding bearish move.

Further, the 14-day relative strength index is reporting bearish conditions with a below-50 print and the moving average convergence divergence histogram is indicating the bearish momentum is gaining strength.

The bearish bias would be invalidated if the spot rises above the previous day's high of 1.1210. That, however, looks unlikely, courtesy of the dovish European Central Bank (ECB) expectations.

The central bank is widely expected to keep rates unchanged on Thursday and set the stage for a rate cut in September by sending out a strong dovish signal.

Daily chart

Trend: Bearish

Pivot points

1. R3 1.1259
2. R2 1.1235
3. R1 1.1193
PP 1.1169
1. S1 1.1127
2. S2 1.1103
3. S3 1.1061

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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