EUR/USD exhibited slight fluctuations after a week of volatility, rebounding from losses. The pair fell over 0.70% to a two-week low after facing a third rejection at the 100-day Simple Moving Average (SMA), finding stability just below the 20-day SMA around 1.0420.
Despite a slight recovery at the week’s end, the pair remains at risk after unsuccessful attempts to maintain levels above the 100-day SMA. The confluence of the 20-day and 100-day SMAs raises concerns of a bearish crossover.
Technical indicators show mixed signals, with the Relative Strength Index (RSI) flat in negative territory and the Moving Average Convergence Divergence (MACD) histogram reflecting ongoing selling pressure.
Resistance is currently at the 20-day SMA, while potential support lies at 1.0380 and 1.0350, a key threshold that may influence future price action.
These movements highlight the difficulty in sustaining upward momentum, particularly given repeated failures at the 100-day SMA. This area has now reinforced itself as a barrier that traders will be closely monitoring in the days ahead. In contrast, the 20-day SMA has not provided strong support, which hints at sellers remaining in control. Recent price action suggests that any attempts to move higher could struggle unless we see a decisive break above resistance.
The possibility of a bearish crossover, as suggested by the alignment of the 20-day and 100-day SMAs, adds further downside risk. A break below the aforementioned support levels of 1.0380 and 1.0350 could open the door for further declines, particularly if broader market sentiment shifts against the pair. These support zones should be watched carefully, as a breach may accelerate selling momentum.
Momentum indicators are not offering much reassurance either. The RSI remaining weak suggests a lack of buying pressure, while the MACD histogram points to ongoing selling. Until these indicators show signs of improvement, traders may remain cautious about bullish positions.
For those dealing in derivatives, particularly short-term options and futures, the current setup presents both opportunities and risks. Shorting rallies near resistance levels has been a successful strategy recently, though it requires close attention to shifting market dynamics. If the pair does move lower, watching for reactions at the next support levels will be key in determining whether there is potential for a reversal or a continuation downward.
Heading forward, price action around current resistance and support thresholds may define short-term direction. If sellers remain dominant and the pair struggles to reclaim the 100-day SMA, the downside scenario could stay intact. However, any sudden change in momentum indicators or a breakout above these resistance points might indicate a change in sentiment that requires adjustment to positioning.
