- EUR / USD is holding on to 1.1600, despite the overall strength of the US dollar across the board.
- EUR / USD: If the reverse head and shoulders neckline breaks, it will expose the 2021 low at 1.1524.
- EUR / USD: The pair needs to reach 1.1700, to confirm the reverse head and shoulders pattern.
The EUR / USD pair fell on Monday during the American session, trading at 1.1613, losing 0.27% at the time of writing. Fading inflation concerns, European and US stock indices in the green, and falling US Treasury yields reflect risk sentiment in the market. Safe-haven currencies like the Japanese yen and the Swiss franc are down, except for the US dollar, which benefits from the minor drop in US yields.
During the Asian session, the shared currency started the week on the front foot, reaching a daily high at 1.1665, but when European and US traders reached their desks, the EUR / USD pair fell to 1.1590 before settling around 1.1600.
EUR / USD Price Forecast: Technical Outlook
Despite hitting a low below 1.1600, the EUR / USD bounced off the reverse head and shoulders neckline. Over the past five days, the pair appears trendless, with no clear direction, hovering around the 1.1590-1.1660 range. The reverse head and shoulders pattern may well not be one as the pair has failed to hit the 1.1700 target. However, as the downward sloping daily moving averages (DMA) remain above the spot price, the EUR / USD is heading lower.
For the EUR / USD sellers to resume the downtrend, they will need a daily close below the neckline, around 1.1590. In that result, the EUR / USD could fall to the 2021 lows around 1.1524, but would find the October 18 low at 1.1571 as the first support level, before 1.1524.
On the other hand, a daily close to the EUR / USD above 1.1665 could open the way for the reverse head and shoulders pattern of 1.1700.
The Relative Strength Index (RSI) is at 45, pointing down, indicating that another leg down could be in the charts.