EURUSD – Economic Slowdown Pressuring Weakness

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The EUR/USD trend has been under extreme Bearish pressure for over a month.  Fundamentals seem to be the driving force on this slide.  The lagging impact of lower interest rates and an economic slowdown are weighing heavy on this market.  The recent bounce may be what Bulls have been looking for, but the Bears are still eyeing lower levels.  Get ready for a fight at current levels.  Technically this currency is ready for a short correction higher, but fundamentals are against a turn for higher levels.


Market direction maintains a Bearish posture below the 1.1963 level.  There has been strong economic data for the Euro zone as of late, and EURUSD may be a digestive range trade for a couple of days.  1.1850 should be about it for a return to Support.  All trading under 1.1850 is a negative signal that momentum is building again to the downside.  1.1736 is the extended sell off target.  If more fundamental data contains Bearish overtones, then another wave of fresh selling is likely to enter the market.  1.1575 is the long term Bearish objective.

If the EUR/USD can maintain a sustained trade above 1.1963 then a potential show of strength may be on the menu.  Above 1.1963 it will be a grind as Bulls fight to recapture ground.  1.2049 is the first upside target.  Trading back in this area would be a positive sign that the Bears are taking a short term rest.  1.2118 is the longer term upside objective.  Downward sloping Resistance starts to come into play once the currency lifts back into this area.  If the Bulls can press a rally back into this region a fresh wave of selling is likely to return to the market.  Under the current economic conditions it is likely that more Bearish information is going to trickle into the news.  Although expected, it is unlikely that the market has absorbed all of the negative sentiment.

There is a divergence that is beginning because of the opposing interest rate environment that is forming globally.  The impact is starting to impose its influence on the major markets.  Rumblings of the carry trade are likely to start entering the news soon, but be leery of those looking for EUR/USD parity.  The sky is not falling yet for this market.

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