EUR/USD extends bounce from key support level
James Chen July 23, 2015 10:40 PM
<p>EUR/USD (daily chart shown below) attempted on Thursday to extend its bounce from key support at the 1.0800 level. Initially hitting a one-week high near […]</p>
EUR/USD (daily chart shown below) attempted on Thursday to extend its bounce from key support at the 1.0800 level. Initially hitting a one-week high near 1.1017 in early trading on Thursday, the currency pair pared some of those gains in the beginning of the US trading session as US unemployment claims were reported to have reached the lowest level in four decades at 255K. This initially helped to boost the dollar and weigh on the euro’s earlier gains.
From a broader perspective, downside risk continues to pressure the euro, even as the prospect of a Greek exit of the common currency has been subdued for the time being. At the same time, the US dollar has long appreciated against the euro and currently has even more reason to do so with a looming interest rate hike potentially on the horizon.
While EUR/USD continues to trade within a long-term downtrend extending back to the 1.4000-area high back in May of last year, the past three months have seen more of a sustained, but often volatile trading range generally between 1.0800 support to the downside and the 1.1400 resistance region to the upside.
In the short-term, if the major 1.0800 support level is not immediately broken to the downside, the currency pair could continue to rise within this range towards the key 1.1100 resistance level, where the 50-day moving average is also currently situated.
On a longer-term basis, however, the EUR/USD continues to be biased towards a continuation of the longstanding downtrend. This continuation would be helped along by a breakdown below the noted 1.0800 support level. In this event, the major downside support target is at the 1.0500 level, which is the area of March’s twelve-year low and site of a rough double-bottoming pattern in March and April. A further break below 1.0500, which would confirm a continuation of the long-term downtrend, could pressure EUR/USD towards further downside support around the 1.0200 level.
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