EUR/USD has consolidated within a 4.4% price corridor since February, but this phase of consolidation is changing to a tone of quiet transformation. Technically, the recent EUR decline to 1.1704 proved to be light-weighted, suggesting the pair is shifting to a basing pattern, Benjamin Wong, Strategist at DBS Bank, briefs.
EUR/USD is seeing basing action
“While EUR’s decline to 1.1704 sufficed to meet our prior expectation of a move towards the 38.2% retracement of 1.2349-1.0638 (January 2021’s spike high to March 2020’s lows), at 1.1695; there is a broad disappointment on the lack of follow-through that would have contoured another decline towards the prior double bottom zone around 1.1603, or even the 50% Fibonacci retracement at 1.1494.”
“The higher return has EUR testing all the key moving average levels from 1.1927 to 1.2057; and on the Ichimoku chart, the Kijun support is steadily pushing higher to 1.1892. All these are hinting that EUR is attempting a basing.”
“This quiet transformation remains a test of patience. EUR has the required momentum over the Ichimoku cloud resistance of 1.2092, and 1.2113 the dropped-down resistance that connects 1.2349 (early January high) and 1.2243 (late February highs). Conversely, EUR needs a strong sustained push over the 61.8% Fibonacci retracement of 1.2349-1.1704, at 1.2103.”
“We are in the early stages of a push higher of five legs which would target 1.2349 and beyond.”
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