Technical Analyst, Saxo Bank Group
Summary: Dollar Index once again testing key support at 100.68. Is third time a charm for Bears?
EURUSD have room up to 1.1170 resistance but uptrend showing signs of is weakening
The Dollar Index formed a Bullish Engulfing bottom and reversal candle 14th April from key support at 100.68, but the Index haven’t really been able to get upside traction. The Index needs a close above 102 to fuel a short rebound to around 103 where 55 and 100 daily Moving Averages are providing resistance.
Yesterday the Dollar Index was only cents from testing the support at around 100.68. A close below is likely to lead to a swift move lower towards 97.44.
The Dollar Index is in a medium-term downtrend. RSI is below 40 showing negative sentiment indicating lower Dollar Index levels are likely. 100 weekly Moving Average is providing support but if the Index closes below 100.68 there is no strong support until around 97.44.
EURUSD is trying to crawl higher but the short-term uptrend is weakening. Wednesday buyers could hold the pair to perform a higher close which is a sign of weakness.
However, RSI is still positive with no divergence indicating EURUSD to move higher to test resistance at around 1.1170.
If EURUSD closes below 1.09 a short-term correction down to 1.08 is likely. The rising 55 and 100 Moving Averages will add support around 1.08
The declining 200 weekly Moving Average adds to the resistance around 1.1170-1.1180.
A possible scenario could be EURUSD spiking above the resistance level to touch 1.382 projection at 1.1230 before a larger correction could hit
Weekly RSI is positive and no divergence indicating likely higher EURUSD levels. A close above 1.1180 could pave the way for a medium-term move to around 1.15.
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