EUR/USD opened with a negative gap on Monday and continued trading lower during the Asian morning. The pair fell below the key obstacle of 1.0800 (R1), the lower bound of the longer-term sideways range, to hit support at 1.0770 (S1).
Then, the rate rebounded and is now testing the 1.0800 (R1) territory as a resistance. In my view, the short-term outlook remains negative and as a result, I would expect the bears to take the reins again at some point and aim for another test near 1.0770 (S1).
A break below that hurdle is possible to open the way for our next support of 1.0700 (S2).
Our short-term oscillators detect strong downside momentum and corroborate my view that the pair is likely to continue trading south. The RSI slid and may fall below its 30 line soon, while the MACD stands below both its zero and trigger lines, pointing down.
As for the bigger picture, a clear close below the 1.0800 (R1) key barrier may signal the downside exit out of the longer-term sideways range the pair had been trading, between that hurdle and the key psychological zone of 1.1500.
This may turn the medium-term outlook negative as well, I believe.
- Support: 1.0770 (S1), 1.0700 (S2), 1.0600 (S3)
- Resistance: 1.0800 (R1), 1.0850 (R2), 1.0915 (R3)