Euro (EUR) inched higher against the US Dollar (USD) on Friday, increasing the price of EURUSD to more than 1.1000 after the European Central Bank (ECB) monetary policy announcement. The technical bias remains bearish because of a lower low in the recent downside move. The pair is on the verge of a major breakout through the daily triangle formation.
As of this writing, the pair is being traded near 1.1030. A hurdle may be noted near 1.1111-1.1121, the confluence of a horizontal resistance as well as trendline resistance. An upside breakout through the daily triangle shall open doors for a move towards 1.1216, a major horizontal resistance area. The technical bias will remain bearish as long as the 1.1428 resistance area (the swing high of the Brexit candle) is intact.
On the downside, a support may be noted around 1.1026, the horizontal support area as demonstrated in the above daily chart ahead of 1.0979, the intraday low of yesterday.
The Federal Open Market Committee (FOMC) meeting is scheduled next week. Rumors about long-awaited rate hike from the Federal Reserve are fueling the bullish momentum in the US Dollar Index – that gauges the value of greenback against the basket of six major currencies. A rate hike or even hawkish stance from the Fed will incite a strong selling pressure in the price of EURUSD and vice versa. Some analysts, however, believe that the US Central Bank may put the rate hike on hold because of the landmark Brexit event last month, which triggered uncertainty in global financial markets.
Considering the overall technical and fundamental outlook, selling the pair on the downside breakout through the daily triangle could be a good strategy in short to medium term.
* FXOpen International, best ECN broker of 2021, according to the IAFT