EUR/USD Price Analysis: An inverse head-and-shoulders neckline hold bears from 2021 lows at 1.1524
- EUR/USD clings to the 1.1600 figure, despite overall US dollar strength across the board.
- EUR/USD: If the inverse head-and-shoulders neckline is broken, it will expose 2021 low at 1.1524.
- EUR/USD: The pair needs to reach 1.1700, to confirm the inverse head-and-shoulders pattern.
The EUR/USD slides on Monday during the New York session, trading at 1.1613, down 0.27% at the time of writing. Fading inflation worries, European and US stock indices in the green, and falling US T-bond yields portray a risk-on market sentiment. Safe-haven currencies like the Japanese yen and the Swiss franc fall, except for the US dollar, which benefits from the minimal drop of US yields.
During the Asian session, the shared currency began the week on the front foot, reached a daily high at 1.1665, but as European and American traders got to their desks, the EUR/USD dropped to 1.1590 before settling around the 1.1600 figure.
EUR/USD Price Forecast: Technical outlook
Daily chart
Despite reaching a low below 1.1600, the EUR/USD bounced off the inverse head-and-shoulders neckline. In the last five days, the pair looks trendless, with no clear direction, seesawing around the 1.1590-1.1660 range. The inverse head-and-shoulders pattern could well not be one, as the pair has failed to reach the 1.1700 target. However, as the daily moving averages (DMA’s) with a downward slope remain above the spot price, the EUR/USD is headed to the downside.
For EUR/USD sellers to resume the downward trend, they will need a daily close below the neckline, around 1.1590. In that outcome, the EUR/USD could tumble down to the 2021 lows around 1.1524., but it would find the October 18 1.1571 low as the first support level, before the 1.1524.
On the flip side, an EUR/USD daily upside close above 1.1665 could open the way for the inverse head-and-shoulders pattern of 1.1700.
The Relative Strength Index (RSI) is at 45, aiming lower, indicating that another leg-down might be on the cards.
KEY ADDITIONAL LEVELS TO WATCH