EURUSD Short-Term Bearish Retracement

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EURUSD is trending lower on its 4-hour chart as it formed lower highs below a descending trend line. Price could be due for a pullback to the trend line and it seems that the 61.8% Fibonacci retracement level already held as resistance.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. The 200 SMA lines up with the trend line to add to its strength as resistance, and the gap between the indicators is widening.

RSI is turning up to show that bulls have the upper hand and could still push for an actual test of the trend line around the 1.1075 mark. If this holds as resistance, price could resume the drop to the swing low at 1.0926 or lower. Stochastic is also heading up to show that there’s some bullish momentum left, so buyers could stay on until overbought conditions are met.

The ECB interest statement is coming up this week and there are expectations of additional easing being announced. Some say that deposit rates could be cut by 0.10-0.20% or that a tiered asset purchase program might be announced.

Meanwhile, the dollar could take its cue from CPI and retail sales reports. Both are expected to show weaker figures compared to the previous month, so expectations for another interest rate cut could pick up if the actual readings fall short. On the other hand, strong results could prove positive for the dollar, at least in the short-term.

Other factors that could impact price action might be trade-related updates and Brexit developments, with the latter likely propping up the shared currency on the prospect of a Brexit extension or avoiding a “no deal” situation.

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