EUR/USD Update: Will Price Retest the 1.1600 November 2020 low or Will the Falling Wedge Usher In 1.1840?
The EUR/USD has lost ground this Thursday after the FOMC minutes paved the way for the commencement of tapering in late 2021. With the ECB previously asserting that the PEPP will remain in place for as long as is needed, the EUR/USD’s long-term outlook appears negative. However, the presence of the falling wedge on the daily chart could point to a near-term recovery on the pair.
The behaviour of the EUR/USD at the 1.1652 price mark could determine if the wedge will hold or if the drop towards the November 2020 lows at 1.16 gains momentum. The pair currently trades 0.2% lower as of writing.
Technical Outlook for EUR/USD
The pair has failed to defend the March low at 1.17036. This has opened the door for bears to mount an assault on 1.16527. If this level fails to hold out the bears, 1.16028 could become the new target, as will 1.15396 if the decline is extensive.
On the flip side, a bounce on the 1.16527 support, which is where the lower edge of the falling wedge is located, could be the foundation for a recovery push that initially targets 1.17036 before 1.17505 and the wedge’s upper border come under scrutiny. A break above this level confirms the wedge pattern, allowing for a measured move that targets 1.18927. This move would have to take out 1.18008 and 1.18395 along the way.