Dollar Trades Under Pressure As Euro Defends Near Term Support

Dollar Trades Under Pressure As Euro Defends Near Term Support

Overall, the financial markets are mixed as investor sentiment is stabilized. European indices are already reversing initial losses while US futures point to a higher open. Commodity currencies are staying generally weak. But buying focus is turning away from Dollar and Yen, to Euro.

At the time of writing, the common currency is already the best performing one for the day. There is some upside prospect for the rest of the week. Technically, EUR/USD managed to defend 1.2052 support so far, providing no additional bearish signal. The focus could be back on 1.2188 minor resistance for an indication of a stronger rebound.

On the other hand, EUR/JPY already breaks 126.39 resistance to resume the rebound from 125.07. A focus now is whether EUR/CHF would breakthrough 1.0798 resistance to solidify upside momentum.
US stocks markets suffered the steepest decline since October after Fed give investors a reality check on the state of the economy.

FOMC kept monetary policy unchanged and reiterated: “The path of the economy will depend significantly on the course of the virus, including progress on vaccinations. The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.”
EURUSD Downside Risks Remain After Defending Support
EURUSD is currently stuck between the limits of 1.2052 and 1.2186. A break above the restrictive channel at 1.2186 could breathe some oxygen into the pair, while a dive underneath the 1.2052-1.2080 base may boost negative tendencies.

The short-term oscillators are gesturing mixed signals in directional momentum. The moving averages 5 and 13 stalling below horizontal levels, while the RSI is hovering in bearish territory, a bit above the 30 levels. Yet, the daily candlestick is maintaining a positive charge, suggesting some improvement in the price.

Extending gains above the ceiling of the sideways move at 1.2186, the pair could propel towards the 1.2222 high. An established positive drive beyond the latter could then turn the bull’s focus towards the 1.2284 barriers.

Otherwise, if sellers manage to firmly steer the pair underneath the critical support band of 1.2052-1.2080, this may enhance the decline. The bears could then hit the neighboring 1.2039 obstacles before targeting the 1.2002-1.2010 support boundary.

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Author : Azeez Mustapha

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.