EUR/USD: The bears are back


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Technical bias in EUR/USD turns more bearish now


ForexLive

Italy’s budget worries may be a timely one for the break lower in EUR/USD yesterday but it certainly gave bears a bone to chew on. As price failed an attempt to get above and stay above the 1.1800 handle after the FOMC meeting, it was enough for sellers to come back into the picture and state their case.
Since then, price has fallen back below the 200-hour MA (blue line) turning near-term bias more bearish and a break below the 1.1700 handle only reinforces that notion further. But sellers didn’t only break through those technical levels.

Price closed overnight trading below the 100-day MA (red line) as well and with that it broke below the upwards trendline that has kept the upside move going in the pair since August. It’s still a little early to call a return to the lows seen this year but the technical signs have now started to side back with the bears.
It’s been a short-lived run above the 100-day MA to say the least for bulls but the 1.1800 handle appears to be one resistance level too much at this point time.
Italy’s budget situation may see less headlines in the coming days but it’s far from over with the proposal still to be presented to the EU by 15 October. And depending on the response, it could trigger more reaction in the euro over the next month to come. That’s the key risk to look out for when looking at the single currency.
As for the greenback, yields have not fallen off completely and the dollar survived the aftermath of the FOMC meeting rather well. That’s a pretty strong signal that dollar bulls are waiting to pounce on any given opportunity and it will take much more to flush out long positions at this point. If yields start to head higher again, expect that to provide some tailwind to the greenback as we close out the year.
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