EURUSD stays within a range; support at 0.9700

EURUSD retained a strong footing around the 0.9700 level despite the flash drop to 0.9631 last week and the downside pressures near the 20-day simple moving average (SMA).

The pair continued to trade with weak momentum early on Monday as technical signals provided no clear direction. Although above their recent lows, the RSI is moving sideways below its 50 neutral mark and the MACD is still attached to its red signal line in the negative area. On the other hand, the stochastics have resumed their positive trajectory, reducing the odds for a downturn.

The 0.9773 – 0.9860 resistance zone, which encapsulates the 20-day SMA, will be closely watched in the short term. Any failure to pierce through that bar could squeeze the price back to September’s lows registered within the 0.9600-0.9535 area. A more aggressive decline could initially pause somewhere between 0.9458 and 0.9400 before testing the lower boundary of the bearish channel.

Otherwise, a break above 0.9860 could face fresh limitations near the 50-day SMA and the channel’s upper boundary around 0.9936. If the bulls manage to reclaim parity above the previous high, the recovery could speed up to 1.0118. Traders may consider the scenario of a bullish trend reversal more seriously if the rally extends beyond the 1.0186-1.0255 region.

Summarizing, EURUSD is currently lacking impetus in the short-term picture. A step below 0.9700 could trigger the next bearish round, whilst a decisive close above 0.9773-0.9860 is probably required to boost buying sentiment. 

About the author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics. Previously, she earned a bachelor of science in Economics from the University of Cyprus. Apart from foreign exchange markets, her research interests include the impact of International trade on labour markets and product development.