EUR/USD Showing Signs of Weakness Below 1.1300

Technical analysis of Forex market

Key Highlights

  • The Euro failed to break the 1.1325 resistance and declined sharply against the US Dollar.
  • EUR/USD traded below a crucial bullish trend line with support at 1.1290 on the 4-hours chart.
  • The US Housing Starts in March 2019 decreased 0.3% (MoM), whereas the forecast was +6.5%.
  • The US Existing Home Sales in March 2019 could dip 2.3% (MoM), whereas the last was +11.8%.

EURUSD Technical Analysis

This past week, the Euro made a couple of attempts to break the 1.1325-1.1330 resistance against the US Dollar, but it failed. As a result, the EUR/USD pair started a strong decline below the 1.1300 support.

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Looking at the 4-hours chart, the pair topped near the 1.1323 level and traded below the 1.1300 and 1.1280 support levels. More importantly, the pair surpassed a crucial bullish trend line with support at 1.1290.

There was also a break below the 100 simple moving average (4-hours, red), 200 simple moving average (4-hours, green), and the 50% Fib retracement level of the last major wave from the 1.1183 low to 1.1323 high.

Recently, the pair even dipped below the 1.1250 support level and the 61.8% Fib retracement level of the last major wave from the 1.1183 low to 1.1323 high.

On the downside, the main support is at 1.1215. If there is a break below the 1.1215 support, the pair is likely to revisit the 1.1180 support area. On the upside, an initial resistance is at 1.1268, above which the pair is likely to test the 200 simple moving average (4-hours, green).

Only a successful close above 1.1300 could push EUR/USD back in a positive zone. It not, there is a risk of a downside extension below 1.1215 and 1.1180 in the coming days.

Fundamentally, the US Housing Starts report for March 2019 was released by the US Census Bureau. The market was looking for an increase of 6.5% in March 2019, compared with the previous month.

The actual result was disappointing as there was a decline of 0.3% in the US Housing Starts. The last reading was also revised from -8.7% to -12.0%.

The report added that:

Privately‐owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,269,000. This is 1.7 percent (±1.4 percent) below the revised February rate of 1,291,000 and is 7.8 percent (±1.9 percent) below the March 2018 rate of 1,377,000.

To sum up, both EUR/USD and GBP/USD are currently trading in a bearish zone, with a risk of more downsides in the near term.

Economic Releases to Watch Today

  • Chicago Fed National Activity Index for March 2019 – Forecast -0.25, versus -0.29 previous.
  • US Existing Home Sales for March 2019 (MoM) – Forecast -2.3%, versus +11.8% previous.

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