EUR/USD continued its downtrend in yesterday’s trading session post the dismal economic sentiment report that was released out of Germany and also the eurozone which indicated the deteriorating consumer and business confidence and the flagging investment cycle. The economic reports highlighted the fear of geopolitical tensions in the region as one the major reason for the slum in consumer and business confidence in the region. The report has seriously dented the “Eurozone recovery” theory atleast for the time being. The analyst community and forex traders are now using every rally in the EUR/USD as a selling opportunity as they now believe that the European growth story would be hugely dented because of the geopolitical tensions in the region.
On the daily charts for the EUR/USD the currency pair saw a huge sell off in the earlier part of the day but in the second half of the day, EUR/USD saw a smart pull back from the all important support levels at $1.33307, though still marginally closed in the red. The EUR/USD is retesting the lower end of the Bollinger band support at the current juncture. The stochastic oscillator for the EUR/USD has given a fresh sell signal and has formed a lower high which is a bearish signal and we might see the currency pair heading lower in the short term. The weekly charts for the currency pair are still showing no signs of a reversal and therefore are in line with the overall bearish stance on the EUR/USD.
Traders should short the EUR/USD below $1.3320 with a primary target of $1.3285 with a strict stop loss at $1.3421.
Traders should go long only if the EUR/USD closes above $1.3421 with a primary target of $1.3490 with a strict stop loss at $1.3320.