**EUR/USD Mid-Day Outlook: Extended Correction in Progress**
*Based on analysis originally published by ActionForex.com*
The EUR/USD currency pair continues its corrective trajectory during the mid-day trading session. The market dynamic illustrates a sustained bearish tilt as the pair remains under pressure below the 1.0700 psychological resistance level.
This article dives deeper into the current technical landscape and short- to medium-term outlook for the EUR/USD pair, while offering detailed analysis derived from ActionForex’s original mid-day update. Our intent is to offer traders a more comprehensive understanding of the underlying trends influencing the pair right now.
### Current Technical Landscape
The EUR/USD pair is engaged in a correctional phase that began after the uptrend culminated near recent highs. The euro has lost momentum after failing to break higher, allowing the US dollar to regain some strength across the board. The retracement currently unfolding presents significant implications for near-term support and resistance levels.
Key Observations:
– The pair remains on the downside after failing to reclaim the 1.0700 handle.
– The correction began after peaking near 1.0915 earlier this month.
– The bearish movement is seen as part of a larger corrective pattern rather than the beginning of a long-term downtrend.
From the intraday chart perspective:
– Current momentum favors the US dollar as risk sentiment appears constrained.
– Selling interest intensifies near the 1.0680 zone, reinforcing short-term tops.
– Initial support comes into play around the 1.0660 region, which aligns with the 38.2% Fibonacci retracement of the recent major rally.
### Short-Term Trading Range and Momentum Analysis
Immediate price movement highlights a consolidation behavior as the pair attempts to settle beneath 1.0680.
– Resistance Levels:
– Initial resistance is noted at 1.0680, which caps recovery attempts.
– The next significant resistance stands at 1.0735, a prior support-turned-resistance.
– A break above 1.0735 would open the door toward 1.0785 and potentially 1.0800.
– Support Levels:
– Key support lies at 1.0640, marking the 50% Fibonacci retracement level.
– Further support is expected at 1.0600, the psychological level often approached during dollar strength phases.
– Breakdown below 1.0600 could accelerate a deeper pullback toward 1.0560.
Momentum Indicators:
– RSI (14) on the 4-hour chart is hovering below the neutral 50 line, suggesting lack of bullish momentum.
– MACD shows descending signal lines reinforcing the bearish corrective tone.
– Moving averages, particularly the 20-period EMA, are beginning to slope downward confirming bearish price pressure.
### Price Action and Elliott Wave Interpretation
From an Elliott Wave standpoint, the current correction may represent the second leg of a broader three-wave structure. Assuming the uptrend from 1.0600 to 1.0915 was an impulse (wave A), the decline toward 1.0640 can be classified as wave B or part of a wider complex pattern requiring further unfolding.
This interpretation suggests:
– The current move may still be incomplete, possibly requiring one more drop to establish a firmer bottom at or below 1.0600.
– On completion of this leg, a reversal toward the upside may resume as part of the next impulse wave.
– Only a decisive break below 1.0600 would suggest the broader trend has reversed to bearish.
### Fundamental Drivers: EUR and USD Factors
Fundamentally, the euro struggles amid political uncertainty in the eurozone, especially with French elections impacting investor confidence. On the other side, the US dollar is benefiting from relatively stable economic indicators and a more hawkish tilt from the Federal Reserve.
Key influential macroeconomic factors:
– Eurozone inflation remains sticky but manageable, potentially limiting ECB tightening.
– Federal Reserve signals from June’s FOMC meeting
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