Image © Adobe Images
The EUR/USD exchange rate is quoted at 1.1640 at the start of the new week having fallen a sizeable 1.77% the week prior. Analyst and technical forecaster Richard Perry of Hantec Markets says the pair appears to have entered a short-term downtrend and that strength will be seen as a chance to sell.
The slide on EUR/USD continues. Another negatively configured candlestick on Friday shows that the market is increasingly happy to sell into strength.
The importance of the resistance from the old support band 1.1695/1.1750 is growing and how the bulls react around here will be important if a rebound kicks in over the coming days. We now see a new downtrend formation of lower highs and lower lows of the past few weeks.
With the top pattern now in place, alongside momentum which is now correctively configured, we see near term strength as a chance to sell. This will at least be in place until 1.1750 resistance can be broken.
A retreat towards the 1.1420/1.1490 old highs is still likely.
A tech rally into the close on Friday helped a recovery take hold on Wall Street and continues to have a positive bias into the new trading week.
US Democrats are still trying to work on a fiscal support package that could potentially be voted through this week. If so, it could signal a sustainable shift in market sentiment which has been trading very much with the risks in mind recently.
Rising COVID second wave risks at a time in which US Congress has failed to deliver on a fiscal support package in the US.
With the Presidential election just five weeks away now, political risk is also a factor as Trump is already threatening to take the result to the Supreme Court if he loses.
The negative risks would be lessened if a fiscal package can be agreed upon. This morning we see equities continuing on the wave of Friday’s rally, whilst the dollar strength is also rolling over. How long can this improvement in sentiment last may depend upon progress on fiscal support in Congress.