EUR/USD is trading with a bearish bias and is likely to extend it in the coming days due to strong bearish pressure building at around 1.0600.
According to the 4-hour chart, EUR/USD is trading below the 21 SMA and below the 200 EMA. As long as it trades below these two moving averages, it will be an obstacle for the euro to resume its uptrend.
On the chart, we can see the formation of a rising wedge pattern. This pattern is likely to influence the price action and the pair could continue its downward movement and reach 1/8 Murray at 1.0376.
Yesterday in the American session, the euro approached the 2/8 Murray support area and has been bouncing ever since. Now it is likely to find strong resistance at 1.0550 (21 SMA). In case it fails to break above this level, it could drop towards 1.0498.
The pair is likely to continue moving sideways between 1.0598 (2/8 Murray) and 1.0591 (200 EMA). It needs to consolidate above both levels to open the doors to further gains.
The ECB has already announced the end of the bond purchases, saying it will raise interest rates by 25 basis points in July, leaving the door open for a 50-basis point move in September.
On the upside, the next hurdle to watch is the 3/8 Murray line around 1.0620. The pair is expected to see downside pressure eased if it closes above the latter, with the next target at 4/8 Murray at 1.0742 and the high of May at 1.0786.
Our trading plan is to wait for a pullback at the 21 SMA or 200 EMA to sell with targets at 1.0498 and 1.0376. The eagle indicator is giving a negative signal. So, the euro is likely to continue its downward movement against the US dollar.
