EURUSD Long-Term Forex Trend Still Intact

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EURUSD Long-Term Forex Trend Still Intact

EURUSD hit resistance at the middle of its long-term rising channel visible on the 4-hour chart, but the forex trend is still intact. Price could make another test of the channel support before resuming its climb.

Support is located at the bottom of the channel at the 1.1000 major psychological level and a bounce off this area would confirm that the forex trend would carry on. On the other hand, a break below the channel support would indicate that a reversal will take place.

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For now, the short-term 100 SMA is moving above the long-term 200 SMA, confirming that the uptrend is set to resume at some point. However, the moving averages are edging closer together and signaling the possibility of a downward crossover.

EURUSD Fundamental Factors

In terms of fundamentals, the path of least resistance is to the downside since Greece is facing the possibility of defaulting on its debt. The country has been unable to meet its debt payments last week and opted instead to consolidate their repayment for the month in order to buy more time and possibly secure a bailout deal.

Should they fail to do so, they could be forced to default on their loan and exit the euro zone. This could spark fears of debt contagion and threaten the stability of the shared currency, as other nations that can’t meet their debt payments might also be kicked out.

Meanwhile, the US economy just printed a stronger than expected NFP report for May, confirming that the Fed could stay on track to tighten monetary policy before the end of the year. Traders are pricing in the odds of seeing an interest rate hike by September, which might continue to keep the dollar supported against its peers until then.

Event risks for this setup include the US retail sales report mid-week and any updates on the Greek debt talks.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.