EUR/USD continued sliding during the European morning Tuesday, falling below the support (now turned into resistance) barrier of 1.2065. The pair has been printing lower highs and lower lows below a short-term downtrend line since the 19th of April, while on the 20th of the month, it broke below the longer-term upside support line taken from the low of the 10th of April. Having these technical signs in mind, we believe that both the short- and medium-term pictures of this pair are negative.
The dip below 1.2065 may have opened the way for the psychological territory of 1.2000, but we would like to see a decisive break below that zone before we get confident on further declines. Such a move could set the stage for our next support barrier of 1.1925, defined by the lows of the 10th and 11th of January.
Taking a look at our short-term oscillators, we see that the RSI stands below 30 and point south, while the MACD, already negative, has turned down as well and crossed below its trigger line. These indicators detect strong downside speed and corroborate our view that EUR/USD may be poised to continue trading lower.
On the upside, we would like to see a break back above the crossroads of the 1.2065 level and the aforementioned short-term downtrend line before start examining whether the bulls have taken the driver’s seat, at least in the near term. Such a break could see scope for upside extensions towards the 1.2140 resistance hurdle, defined by yesterday’s peak.
