The EUR/USD has reversed gains made earlier in the session and is now trading lower. Despite a slump in retail sales in February, and the German ZEW/EMU Economic Sentiment beating expectations, the US Dollar was able to reverse earlier losses against the Euro and has turned the tide against the single currency.
So what has produced the startling turn of sentiment in the last hour?
The US bond yields have nothing to do with the situation, as the 10-year US Treasury Yield asset has been trading in a range. The sentiment may have to do with the technical pattern on the charts, which show the EUR/USD displaying progressively declining tops; a mark of withering bullish momentum.
The bearish flag on the 4-hour chart has given way and the 1.19472 resistance has proven too strong for bulls. This has allowed for bears to come into the fray, driving prices towards the 1.18927 mark which serves as the lower boundary of the range.
Technical Levels to Watch
The 4-hour chart shows that the pair has retreated from its intraday highs at 1.19274 and is testing the support at 1.18927. A breakdown of this support level allows the bears to make a push towards 1.18395, with 1.18008 serving as an additional target to the south.
On the other hand, a bounce on the 1.18927 support allows for a retest of 1.19472 as the price consolidates. However, a break of the range’s ceiling allows bulls to make a run towards 1.19999, with 1.20549 serving as an additional downside target.
It is also possible we could see some consolidation on the 4-hour chart between 1.19472 above and 1.18927 below, ahead of the FOMC meeting tomorrow.