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- EUR/USD Technical Strategy: Flat
- Euro forms bearish candlestick pattern below 1.08 figure vs. US Dollar
- Waiting for confirmation, passage of event risk before selling seems prudent
The Euro turned sharply lower against the US Dollar, with prices putting in a bearish Dark Cloud Cover candlestick pattern to hint that a top may be taking shape. Confirmation is absent for the time being however, with the series of higher highs and lows defining the latest upswing still intact.
Near-term support is at 1.0518, a horizontal pivot that has acted as both an up- and down-side barrier in recent months. A daily close below that exposes the late-2016 floor at 1.0367. Alternatively, a push above the January 17 high at 1.0720 opens the door for a test of the 38.2% Fibonacci retracement at 1.0828.
A short position at current levels is not entirely unattractive for a purely technical perspective. Risk/reward parameters are also acceptable. However, looming event risk by way of the ECB rate decision and lingering uncertainty US fiscal policy warn against the trade at least until the near-term rise is decisively overturned.
Will the Euro mount a recovery in the first quarter of 2017? See our forecast and find out!