Title: In-Depth Technical Analysis of EUR/USD: Consolidation Persists Amid Bearish Pressure
Source: Adapted and expanded from an article originally published by ActionForex.com, “EUR/USD Mid-Day Outlook” by the ActionForex team.
The EUR/USD currency pair continues to hover in a narrow range as the market digests recent macroeconomic events and prepares for further signals. The technical outlook suggests that the bearish pressure plaguing the Euro may persist in the near term, with the pair near recent lows. A lack of bullish momentum signals that any rebound may remain corrective unless significantly stronger buying materializes. In this updated and extended technical analysis, we explore the various price levels, potential market scenarios, and technical indicators shaping the outlook for EUR/USD.
Current Market Conditions (as per June 2024 observations)
The EUR/USD pair remains trapped in consolidation after encountering strong resistance near the 1.0850 level earlier this month. The pair has since declined, pushing below the 1.0800 threshold and failing to maintain upward momentum across short-term charts. Recent data from both the Eurozone and the US have furthered this tepid trading environment.
Key observations include:
– EUR/USD is currently consolidating above the 1.0670 immediate support level.
– Momentum indicators remain weak. The Relative Strength Index (RSI) hovers close to the oversold territory on the 4-hour chart.
– Daily and 4-hour moving averages point to continued weakness. The pair trades below its 20-period and 55-period exponential moving averages.
– Eurozone economic indicators show sluggish growth and weak inflation, limiting the bullish potential for the single currency.
– The US Dollar remains firm, supported by hawkish expectations around potential Federal Reserve policy decisions.
Technical Analysis: Short-Term Chart Perspective
In the short-term timeframe, the EUR/USD displays limited directional bias. Consolidation is visible between key support and resistance levels. Here’s a closer look at the technical formations:
– The pair remains confined between the support at 1.0670 and minor resistance at 1.0760.
– A break of 1.0670 is essential for a renewal of downside momentum toward the 1.0600 level.
– On the flip side, a breach of 1.0760 might suggest temporary recovery, but any rebound remains vulnerable while the pair stays below the higher resistance area near 1.0800.
– RSI remains subdued, pointing to limited bullish energy for now.
– MACD on the 4-hour chart has flattened, providing little direction.
If EUR/USD maintains consolidation above 1.0670, there remains a chance for a retest of the 1.0760-1.0800 zone. However, repeated failure to break above 1.0800 would likely reaffirm bearish positioning.
Medium-Term Outlook and Wave Structure
In examining the broader price structure, the EUR/USD appears to have resumed its medium-term decline that began in late 2023. The downtrend from the peak near 1.1138, which occurred in December 2023, has persisted through most of the first half of 2024.
Key elements of the structural trend:
– The corrective rally from the 1.0447 low, recorded in April 2024, now appears complete with a failed attempt to stay above 1.0900 in late May.
– A descending wave structure dominates the medium-term price action, with series of lower highs and lower lows evident on daily charts.
– The reversal at 1.0915 in early June likely marked the completion of an upward corrective phase.
– There is now a risk that the larger downtrend from the 1.1274 top in July 2023 is resuming.
– Next key support for this bearish structure lies at 1.0600, followed by 1.0447. A break of the latter would open the path to 1.0339.
Using Elliott Wave principles, we
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