EURUSD slumped in the wake of a sturdy nonfarm payrolls report on Friday, sinking back below its 20-day simple moving average (SMA) and under the 1.1800 level.
Encouragingly, though, the selling pressure was not violent enough to close the session below the previous key support of 1.1760, with the price currently trying to set a foothold in the region again.
However, whether the pair will successfully recoup its recent losses is an open question as the RSI is still clearly within the bearish zone, while the MACD, although above its red signal line, is preserving a downward direction below zero. Moreover, the Stochastics have entered the oversold area but have yet to confirm a bullish intersection, flagging that the bears may remain in play for now.
If the 1.1760 floor collapses, the focus will immediately shift to the March low of 1.1703, a break of which would mark a new lower low in the 2021 picture, likely bringing the crucial base of 1.1620 registered during the 2020 fall season next into view. Lower, the pair would face a broader outlook deterioration, and it would be interesting to see if the sell-off can stabilize around the 1.1500 psychological number.
Alternatively, an upside reversal could initially target the 20-day SMA at 1.1811 ahead of last week’s resistance of 1.1865. Crawling higher, the bulls may take a rest somewhere between the 50-day SMA and the nearby 1.1935 barrier from June, where a successful breakout would open the door for the 1.2000 handle and the 200-day SMA.
All in all, EURUSD is still exposed to negative risks in the short-term picture despite today’s consolidation. Failure to hold above 1.1760 could strengthen selling forces towards 1.1700, whereas a bounce higher may face limitations within the 1.1811 – 1.1865 territory.
Origin: XM
