eurusd ascent on greek deal confronting major resistance 1009882015

The most recent leg within EUR/USD’s prolonged range-bound price action has been this past week’s rise from just above key 1.0800 support. As of Tuesday, […]


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By :  ,  Financial Analyst

The most recent leg within EUR/USD’s prolonged range-bound price action has been this past week’s rise from just above key 1.0800 support. As of Tuesday, this ascent has approached major resistance around the 1.1100 level, which can now be seen as an important demarcation line dividing bearish and bullish sentiment.

Tuesday’s initial rise towards this resistance was prompted in part by an announcement that a Greek bailout deal had been agreed to “in principle” and that the technical aspects of the agreement had been established. The expectation that this deal should ward off Greece’s exit from the euro, at least for the time being, provided a boost to the common currency.

Despite this temporary boost, however, the US dollar portion of the currency pair continued to strengthen on the seemingly pervasive anticipation of a Fed rate hike this year that would create a widening interest rate differential, placing substantial pressure on the EUR/USD and prompting an intraday retreat on Tuesday from the noted 1.1100-area resistance.

EUR/USD Daily Chart

 

Along with the resistance imposed by the noted 1.1100 price level, the 50-day moving average is also currently placing technical pressure on the currency pair. From a longer-term perspective, EUR/USD continues to trade within a well-defined downtrend extending back to the 1.4000-area high back in May of last year.

In the short-term, if the noted 1.1100 resistance level is broken to the upside on potential impending news of the Greek deal being approved, the currency pair could continue to rise towards its 200-day moving average and intermediate resistance around the 1.1275 level.

Any such rise, however, should likely be short-lived, as fundamental drivers continue to favor a downside bias for EUR/USD. This bearish outlook would be reinforced by a move back down towards the noted 1.0800 support. Any subsequent breakdown below 1.0800 could likely accelerate the currency pair’s fall towards its major downside support target at the 1.0500 level, which is around the area of March’s twelve-year low and the site of a rough double-bottoming pattern in March and April.

Any further break below 1.0500, which would confirm a continuation of the long-term downtrend, could then pressure EUR/USD towards a further downside support target around the 1.0200 level.

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