EUR/USD: below 1.08, where we see 3 failed breakout attempts

EUR/USD: Trend - downward.

Medium-term movement - choppy and short term corrections of the trend.

The price remains below 200 SMA, below the diagonal resistances and below 1.09, indicating that sentiment remains short, still.

However, these supports and resistances are in a medium term choppy, which reduces their strength. The EURUSD pair moves impulsively, because of many factors that influence it: the Fed, the ECB and the speeches of the central banks' local representatives.

Short-term movement is upward: higher tops and higher bottoms.

The short term long  remains strong: Breakout of inside bar with a potential for an increase with 200 SMA target.
Price below the diagonal resistance, as both dynamic and diagonal resistance are close, which can dull the short term long.
1.08 is a key level of resistance, with 3 failed breakouts in the last 6 months. Only a breakout above this level will open the road for the price to reach the upper part of the consolidation.

Suitable spots to sell are around 1.08 after a negative price action signal.

DeM1: We still have a sequential countdown of the indicator to 7, indicating that the short-term movement is in effect - countdown is not over.
DeM 2: Crossing over 60, also indicates that the short-term movement is still active with a probability for a strong impulse. There is no reversal of the indicator, but in the area of an overbought market, it is dangerous for new long positions.

Fundamentals: The US dollar should be the stronger currency because the Fed's monetary policy is tightening and the ECB is still expansionary with significant monthly stimulus and low interest rates. The question is how many of these factors are priced in since markets trade expectations, and according to the theory of technical analysis, this must already be accumulated in the price.

Therefore, more significant is what are the expectations for the next steps of the Central Banks. The more theories are being steadied that the Fed will not be able to make more than 2 interest rate hikes this year because of a slowdown in the economy and the ECB is already considering when to stop them. This is what currently supporting the euro, putting pressure on the dollar. The latest US data was weaker, which reinforces the thesis that the Fed will not raise interest rates soon, which pushes the dollar down. This trend will persist until US data comes out worse.

The French elections will have the most influence over the EURUSD sentiment. If Macron goes through in the second round, we may see continuation of the short-term long.

Stefan D. Angelov - Head of Stock Trading

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