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Analysts at Commerzbank noted that EUR/USD has sold off throughout 2018 so far and has recently reached its initial downside target – namely the  55 week  ma, currently at 1.1851.  

Key Quotes:

“We may see consolidation shortly. However, our feeling is that this will prove to be just a stopping point in a more protracted down move. Directly above the market lies tough resistance in the 1.2092-1.2155 band.  

This is the location of the September 2017 high and the March 2018 low. A rally into this band would not even represent a 50% retracement of the move seen this year which is located at 1.2190 and as a consequence our bias remains firmly entrenched in the bearish camp.”

So how far is the down move expected to extend?  

“We have a target zone which consists of the November 2017 low at 1.1553 and the 200  week  moving average at 1.1442 and we would expect the market to decline into this area.  

At this  point  we do not expect to see erosion beyond the 200  week  moving average. Only a close above 1.2190 would cause us to neutralise our outlook. However, only on a close above the 1.2592 2008- 2018 downtrend line would we be able to adopt a more bullish tone (not favoured).”