The EURUSD pair fell to its weakest trading level since May 2020 last week, as the recent FED policy meeting turbocharged the US dollar index to fresh multi-year highs.
It should be noted that the EURUSD pair makes up over 50 percent of the US dollar index, so big moves in the EURUSD equate to major direction moves in the DXY.
Last week the EURUSD pair staged a major range breakout. Typically, when range breaks occur in the euro, especially multi-year range breaks, we tend to see exaggerated directional moves.
And this is exactly what we are seeing with the EURUSD pair, as it spirals towards the 1.1100 support, with few signs of stopping. I fully expect this to continues.
Despite the ECB policy meet this week, I don’t see the EURUSD moving lower stopping anytime soon until the 1.0800 level is reached. For me, bears are now in full control.
Only a move above the 1.1700 level would change the EURUSD pair technically in the medium-term, and a break above 1.1270 is needed in the short-term.
Sentiment is also on the side of euro bears, which leads me to believe that the EURUSD pair could be about to slide even further lower this week, and even next month.
According to the ActivTrader market sentiment tool 78 percent of traders are at least still bullish. According to the ActivTrader market sentiment tool, traders are also bullish on other euro pair. Not a good sign.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the EURUSD pair has broken from a large ascending wedge pattern, with the wedge located between the 1.1300 and 1.1500 levels
Although the wedge support has cracked with conviction, we should expect at least 1.1100 here in the short-term. Although I think 1.1050 or 1.1000 seems more probable this week.
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EURUSD Medium-Term Technical Analysis
Looking at the daily time frame and the EURUSD pair is looking very bearish, and a large head and shoulders pattern, with a minimum target of 1.0800 is playing out.
In the near-term, this looks to be setting up the 1.1150 and 1.1000 levels as likely bearish targets, however, 1.0800 seems the main. 1.1400 and 1.1600 are the big weekly resistance zones if a recovery were to somehow take hold.
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