EUR/USD technical analysis: There has been a textbook retest of the previous wave low

4-Hour Chart

The EUR/USD completed a bearish test of the previous wave low on the 4-hour chart. 

After falling on a positive risk rally EUR/USD could not recover past the 1.1071 resistance zone.

This has now set up a bearish scenario as the price is now making lower highs and lower lows on the 4-hour timeframe.

We could, of course, find some support closer to the 1.10 psychological support level but it remains to be seen if the price can break that much lower.

On the bulllish side, there is also a divergence forming on the RSI indicator which could show some signs of a momentum slowdown.

The price made a lower low while the indicator made a higher low (maked by the red lines). This could potenially mean in the short term we have run out of downside momentum.

 

Headlines this morning 

The German trade balance improves this morning and printed at Eur 19.2 billion vs the expected Eur 18.1 billion for September.

France, however, failed to make the same headway as unfortunately, these missed on expectations as the -Eur 5.6 billion deficit was more than the anticipated -Eur 4.8 billion reading.

French Non-Farm Payrolls improved for Q3 showing a rise of 0.3% vs the previous of 0.2%.

There were also some comments from ECB's Vasle who said the ECB is determined to continue with its current policy until conditions improve.

Additional levels