The Euro Dollar has been under significant pressure this week as the greenback continues to strengthen against most of its major rivals. EURUSD dipped as low as 1.0640 during last week’s Asian trading session and has remained in a downtrend since then. The Euro Dollar was able to hold above 1.0640 for a brief period of time but sustained selling pressure from advancing US Dollars brought EURUSD down again to current levels. The broad-based selloff in riskier assets has also made it difficult for the Euro to continue holding above 1.0000 and sustain any upside momentum. As long as USD bears remain active, the Euro will struggle to find traction and remain above 1.0640 resistance. In order for EURUSD to break out from the current downtrend, we will need an important support level at around 1.0550 first before we can expect further gains towards higher highs and higher resistances once more. If you are bullish on EURUSD, it may be prudent to wait until after today’s European open before placing additional trades in this pair. Regardless of the short-term outlook, it is clear that EURUSD remains well supported by historic norms around this area which could help prevent any sharp downside sell-off if things take a turn for the worse again later today or tomorrow morning
EUR/USD Weekly Trend
As we have seen, the EUR/USD pair has been in a downtrend since mid-May after the European Central Bank announced its decision to stop purchasing bonds and end its quantitative easing programme. As the Federal Reserve began raising interest rates, the US Dollar’s appeal to investors increased and the Euro began to fall against all its major rivals. The pair broke below the 1.0000 support level and continued to fall, dipping below the key 1.0000 level and hitting a low of 1.000068 before buyers stepped in and brought the pair back above this important support level. The pair’s subsequent uptrend began when the Euro Dollar broke above the 1.0640 resistance level and formed a strong uptrend channel. The pair has traded in a close range for the past several weeks as investors try to determine whether it will continue to rise or if it will fall back to key support again.
1.0640 Support
The 1.0640 support level is significant for many reasons. Long-term, it is a long-standing support level that has been around for years, even during periods when the Euro has been stronger against the Dollar. At the same time, however, this level has proven to be a significant resistance for the Euro in the past and has often been the place where the pair has broken out of its downtrend. If EUR/USD were to return back to this support and gain traction against the US Dollar, it could signal that the pair is ready to continue climbing to higher highs once again. As things currently stand, there is a possibility that EUR/USD could dip back down below the 1.0640 support during today’s trading sessions. If this happens, the pair will quickly return back towards the 1.0640 level once again and signal that this might be a good level to buy the pair. Despite the 1.0640 support being a strong level, it is worth noting that 1.0640 has been a strong level for a long time. While it is possible for the pair to hold above this level for a long time and signal that the downtrend is finally over, it is equally possible for the pair to quickly return back towards the 1.0640 level if the overall sentiment towards riskier assets turns in a negative manner over the next few weeks.
1.0550 Support
Another important level to keep an eye on for the Euro Dollar pair is the 1.0550 support. Traders who have been watching the pair closely over the past few months know that the pair has often found support in this area when it dipped sharply lower. The 1.0550 support level has typically been a strong level for the pair and has prevented it from dropping much lower. However, a close above this level has often caused the pair to quickly head back towards the 1.0640 level and signal that the downtrend is likely to continue. As such, to effectively trade the Euro Dollar, it is important to remember that it can often be helpful to look at the overall sentiment of the pair and how it is doing against important support levels before making any trades.
1.0000 Support
As we approach the end of the second quarter, it is important to keep an eye on support levels for the Euro Dollar pair. Traders who have been monitoring the pair’s price action in recent weeks will know that the 1.0000 support level has often proven to be a significant level for the pair. If the pair dips below this level, it is likely to continue lower towards the next support level at around 1.000030. If, however, the pair manages to maintain its current levels above 1.0000, it could signal that USD bears are losing momentum and have found a new level to attack from. As we approach the end of the quarter, it is important to keep an eye on support levels for the Euro Dollar pair. Traders who have been watching the pair’s price action in recent weeks will know that the 1.0000 support level has often proved to be a significant level for the pair. If the pair dips below this level, it is likely to continue lower towards the next support level at around 1.000030. If, however, the pair maintains its current levels above 1.0000, it could signal that USD bears are losing momentum and have found a new level to attack from.
More Important Supports Below
Below 1.0640 there are a few more support levels to keep an eye on for the Euro. First, there is the 1.0550 support level mentioned above. Below this level, the next support level is at around 1.000030. There is a danger that the pair could dip below this level as the US Dollar continues to strengthen. If this happens, the pair could remain in a range for a while until it once again manages to bounce back towards these levels.
Conclusion
As we approach the end of the second quarter, it is important to keep an eye on support levels for the Euro Dollar pair. Traders who have been watching the pair’s price action over the past few months will know that the 1.0000 support level has often proven to be a significant level for the pair. If the pair dips below this level, it is likely to continue lower towards the next support level at around 1.000030. If, however, the pair maintains its current levels above 1.0000, it could signal that USD bears are losing momentum and have found a new level to attack from. As we near the end of the second quarter, investors will be looking for signs that the Euro Dollar is about to return to its previous highs. If we look carefully, we can see that the 1.0000 support level is still holding as a strong level for the pair and is likely to prevent any further declines in the near future.
