The EUR/USD currency pair opened the week with a slight decline, largely influenced by a modest rise in the US Dollar. The uptick was driven by increasing optimism surrounding a potential trade agreement between the U.S. and China. Despite this, the EUR/USD remains above the critical 1.1200 level, showing some resilience after hitting a one-month low last Thursday. Traders are keenly awaiting a joint statement from the US and China to gain further insights into the proposed deal.
Technically, the situation for the EUR/USD appears cautious. The recent dip below the 100-period Simple Moving Average (SMA) on the 4-hour chart has sparked interest among bearish traders. Oscillators on this same chart are firmly entrenched in bearish territory, indicating a prevailing negative sentiment. This trend is mirrored on the daily chart, where early signs of negative momentum are emerging. As such, the current landscape suggests that the most probable direction for the pair is downwards.
Despite the bearish signals, the EUR/USD has been holding its ground just beneath the 1.1200 threshold, which aligns with the 200-period SMA on the 4-hour chart. A decisive breach of this support level could lead to heightened bearish momentum, potentially driving the pair lower towards the 1.1110 to 1.1100 range, with some intermediate support expected around 1.1130 to 1.1125.
Conversely, if the EUR/USD rises past the 1.1250 level, it may target the 1.1300 level. However, any attempts to move higher are likely to face significant selling pressure, particularly near the 100-period SMA on the 4-hour chart, located around 1.1350 to 1.1355. This level serves as a crucial pivot point; a clear breakthrough could undermine the dominant bearish sentiment in the near term.
