EURUSD is sustaining a negative tone today after plotting two bearish daily. EUR/USD has dropped below 1.22, the lowest in three weeks. Rising US yields and the Fed's reluctance to act are boosting the dollar. Covid developments are eyed.
EUR/USD BREAKS BELOW ASCENDING TRENDLINE
The Euro is becoming more bearish against the Greenback despite the long-term bullish trend. The surge in EUR/USD seen since the beginning of November created an ascending trendline marked by connecting the higher lows, but this has now been broken to the downside as the pair struggles to remain above 1.20.This price reversal is mostly due to a strong comeback in the US Dollar.
However, bearish MACD divergence suggests that the exchange rates rally since November could be running out strength . The MACD histogram's notable decline in recent days also hints a fading bullish momentum.
A convincing break below the December 23 low (1.2155) would probably cause a stronger bearish run towards the support/resistance line seen at the beginning of December (1.2120). This would further increase the notion that the path of least resistance is lower, possibly testing the 1.20 psychological line.
Alternatively, a break above 1.2270 could see buyers regain control in an attempt to bring EUR/USD above the ascending trendline, aiming for the December high at 1.2350.
