Good day forex traders.
We last spoke of the EUR/USD bouncing between the ranges of an immediate channel. It was difficult to determine a direction as demand swayed amongst the various sentiments.
Having said so, we are at a critical situation and it is important that we understand the EUR/USD.
Looking at the EUR/USD chart above, we note that the currency pair is testing a strong resistance. This region has held since 2015.
This is crucial for both buyers and sellers as it might be the start of a reversal or a new trend.
A successful breach may open up 1.16 while a failure will send the EUR/USD back down to the previous channel limits. The middle bollinger bandar 1.115 may be a support.
There seems to be an increase in negative sentiments with regards to the US economy. The weak US first quarter GDP of 0.5% brought renewed concerns that the interest rate hike will be stopped. A few analyst are even calling for an end to the strong US dollar trend.
In the meanwhile, the price of oil has risen above $45. The is encouraging the rally of the commodities currencies, adding further downwards pressure to the US dollar.
We need to continue to monitor the progress of the US economy. It is supposed to be in a tightening phase of the economy cycle but yet real performance leaves more to be seen.
As mentioned earlier, we need to monitor the resistance region and hence we should drop down to a shorter time frame.