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Talking Points:
- EUR/USD Technical Strategy: Flat
- Euro soars to 6-month high vs. US Dollar, neutralizes bearish setup
- Negative RSI divergence warns a downturn may still be in the works
The Euro surged to the highest level in six months against the US Dollar, neutralizing signs of topping that emerged below the 1.10 figure last week. Negative RSI divergence warns of fading upward momentum as prices test 12-month trend line resistance however, hinting a downturn may yet be in the works.
Initial support comes in at 1.0938, the 14.6% Fibonacci expansion, with a turn back below that opening the door for a test of the April 27 low at 1.0849. Alternatively, a daily close above the 1.0993-1.1004 area (23.6% level, trend line) paves the way for a challenge of the 38.2% Fib at 1.1082.
RSI divergence is not a sufficient-enough signal to enter short. Furthermore, potent fundamental event risk may yet materially alter positioning. With that in mind, opting to stay on the sidelines until an actionable short trade opportunity presents itself seems most appealing for now.
What will determine where EUR/USD goes through mid-year? See our forecast to find out!
