Technical Analysis - Daily time frame chart.
Through the daily chart, we can see that the euro has given back all the gains it has made against the US dollar over the last 6 years.
As equities remain under pressure, the USD continues to rally and pressure major currency pairs.
In the particular case of the EUR/USD pair, we can see that, even though the pair remains strongly pressured, the declines may be alleviated in the short term.
The price has retested an important support zone near the $1.05 and if buyers maintain the control of the price above that zone, we can expect a short-term recovery in the pair.
Furthermore, when we look at the RSI indicator, we can see that on the weekly timeframe the indicator is about to give signals of oversold. If we look at lower time frame charts, we can see these signals are even more evident.
EUR/USD, Weekly time frame chart. Source: xStation
USD dollar index (USDIDX)
When analyzing the dollar index, we can see that the price has reached the upper limit of the range that has lasted for more than 7 years and for 4 consecutive weeks that the USD has been appreciating, so we cannot exclude the possibility that we may see a pullback.
In the short term, this scenario would support the recovery in the EUR/USD pair.
Weekly time frame chart. Source: xStation 5
During this session, USD leads the gains.
Source: currency-strength.com
Henrique Tomé, XTB Portugal
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