EURUSD Pullback Analysis Post-180 Pips Drop
EURUSD experienced a significant pullback after a 180-pips drop last week, starting from Wednesday. The market broke a key support level, highlighted in an orange rectangle, signaling a bearish sentiment. Prices are expected to retrace to the 38.2% and 23.6% Fibonacci retracement levels, which are considered shallow retracements. Within this retracement zone lies the EMA 50, which could act as a confluence level with the Fibonacci retracement and the key level resistance marked by the orange rectangle.
Bearish Indicators and Market Sentiment
The current price is trading below the value area, reinforcing the bearish outlook. Both the EMA 50 and EMA 200 are aligned in a bearish configuration, with the EMA 50 positioned below the EMA 200. The lack of convergence between these EMAs indicates sustained bearish momentum. Oscillator indicators further support this sentiment, with the MACD's signal line below the 0 line and the RSI struggling to break above the 50-60% levels.
Short-term Trend Line and Potential Continuation
As the market attempts to rebound from last week’s losses, a short-term trend line has developed, indicated in red. A break below this trend line could strongly suggest a continuation of the bearish trend.
| Currency | Event | Forecast | Previous |
|---|---|---|---|
| CAD | Housing Starts (May) | 247.0K | 240.2K |
| USD | NY Empire State Manufacturing Index (Jun) | -12.50 | -15.60 |
| CAD | Foreign Securities Purchases (Apr) | 12.30B | 14.37B |
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