EUR/USD is holding on to high ground reached after the Draghi disappointment.
The team at SocGen explores the next moves:
Here is their view, courtesy of eFXnews:
After breaching below the flag formation, EUR/USD has retested March lows of 1.05/1.04 which more importantly correspond with the multi decadal channel lower limit, notes SocGen.
“Currently a sharp rebound is being witnessed however signs of reversal still lack. Monthly RSI indicator is probing a horizontal line while weekly MACD still languishes within negative territory and below a resistance line,” SocGen adds.
“Thus indicators point towards limited upside in EUR/USD and the rebound is likely to remain capped,” SocGen argues.
“Ongoing correction is retracing the 2000-2008 up move however a break below key levels of 1.05/1.04 will confirm that this is in fact a downtrend of a larger degree.
In such a scenario we can expect retracement of the whole up cycle since the 1980s and first meaningful support will be at 1.00/0.9930 and next at graphical levels of 0.96/0.9530 consisting of 1989 lows, 2001 highs and a projection for the down move,” SocGen projects.
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