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#1 08-01-2020 09:34:59

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EUR/USD is weakening, is a rebound imminent? (Commerzbank)

EUR/USD is weakening, is a rebound imminent? (Commerzbank)

Faced with widespread risk aversion following Iran's attack of US bases on Tuesday, the EUR/USD pair is under pressure, but still retains key support, which still points to a return to the upside.

Indeed, the pair remains above the 200-day moving average, which is currently at 1.1140, and has been within a visible bullish channel in daily data for the last 2 months. If the rise resumes, the psychological threshold of 1.12 and the end-of-year peak at 1.1240 will be the next targets to watch.

UOB bank believes that the EUR/USD correction could extend to the 1.1110 region in the coming weeks:

"We stressed on Tuesday that the euro recovery lacks momentum, but we still believe there is room for a stronger euro. Instead of strengthening, the euro abandoned all of its Monday's gains and dropped to a low of 1.1131. Although the bearish momentum hasn't improved much, the risk is down and the EUR may test the strong support level at 1.1110 (overnight lows act as a minor support). At this point, the prospect of a sustained decline below this level is not high. The first resistance level is at 1.1170 followed by 1.1195".

Commerzbank analyst Karen Jones notes that the euro-dollar pair could extend its decline towards the 55-day moving average at 1.1064, but believes that the pair should see some stabilisation around that level.

"The market is facing strong resistance at 1.1197-1.1240 - the 55-week moving average, the 2019-2020 downtrend channel and the recent peak, and probably just needs to be further consolidated. This protects the 200-week moving average of 1.1360, which continues to represent a critical breakpoint in the medium term."

"Any further declines will find support at the 55 and 20 day moving averages at 1.1095/1.1065 and the 3-month uptrend at 1.1047."

Daily EUR/USD chart

"Anything worth having is worth going for - all the way." - J.R. Ewing



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