Yesterday’s ECB Meeting Backfired on EURO resulting on Strong Bearish trend against USD in the process. The price broke below 1.1075 support and may head towards 1.0900 area. Let’s check EURUSD Technical Analysis for more levels and insights.
January 24, 2020 | AtoZMarkets.com – EURUSD has been struggling at the edge of 1.1075 area since it broke below 1.11 with a daily close. The price formed Head and Shoulders pattern earlier which confirmed yesterday as price broke below 1.1075 area.
Recently, ECB kept its rates unchanged while reviewing the policies it has been employing till date. Euro Zone business activity has been weak since the start of the year 2020. ECB stated that Manufacturing Industries are currently a drag for the economy. As per Reuters poll, Euro Zone economic slowdown is currently bottomed out and recession risks turned low.
As ECB meeting turned Dovish, EURO lost significant momentum against USD which may extend further in the coming days. Though the Bears are still starting to establish themselves below 1.1075 area, certain correction and retracement can be seen.
EURUSD completed the Head and Shoulder
After the dovish ECB event yesterday, EURUSD confirmed the Head and Shoulders pattern by breaking below 1.1075. The break was quite impulsive and managed to push the price below 1.1050 area. Moreover, the price also moved below the Trend Line support adding more to the Bearish bias in the process.
image: EURUSD 1 Hour Chart
According to 1 Hour Chart, EURUSD is currently pushing lower while also developing Bullish Divergence along the way. After the impulsive break below 1.1075 area, the price has managed to correct on the way and get confluence from the dynamic levels. Currently, the price is held by the dynamic level of 20 EMA and Tenkan Sen closely. Moreover, Kijun line is still around 1.1075 area and Trend Line.
As the price confirmed Head and Shoulders Pattern with the break yesterday, certain retest at 1.1075 may occur before the Bearish momentum strengthens. Despite the strong Bearish trend in place, certain retracement higher will only add to the Bearish momentum.
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ECB Backfired EURO may result in Strong Bearish Trend
EURUSD confirming the Head and Shoulders pattern has also confirmed a Measured Objective at 1.0920 area. According to Daily Chart, the price breaking below 1.1075 also contributed to breaking below the Kumo Cloud. Though the recent trend was Bullish but having a Long-Term Bearish trend backing up may lead the price to 1.09 again.
image: EURUSD Daily Chart
As per MACD signal line breaking below 0.00 level, Bears are currently quite strong and may continue lower. When the price reached 1.12 area, it did create Bearish Divergence which is still in play. As the price remains below 1.1200 area with a daily close, the Bearish Bias may continue further without any risk of strong bearish counter.
To conclude, EURUSD is breaking below 1.1075. This confirms further Bearish momentum for EURUSD is in the making. Though certain correction and retracement towards 1.075 may occur but the price is set to reach 1.09 area in the coming days.