The EUR/USD pair trades at the lower end of its Friday's range, and the daily chart shows that a bearish 20 SMA caps advances around 0.9775, suggesting buyers are not strong enough to push it through the 0.9800 figure. At the same time, the Momentum indicator heads higher within positive levels, but the RSI indicator stands directionless at around 44, also reflecting limited upward strength.

In the near term, and according to the 4-hour chart, the pair is neutral. EUR/USD is hovering between the 20 and 100 SMA, none of them indicating a specific directional strength, as technical indicators rest above their midlines, although without hinting at a potential directional movement.

The action was repeatedly capped by falling 10DMA which reinforces a Fibo barrier at 0.9772 (38.2% of 0.9999/0.9631 bear-leg), with near-term bias expected to remain in neutral mode, while the latter caps.

Mixed daily studies (strong bullish momentum vs MA’s in bearish setup) contribute to directionless near-term mode.

Expect initial bullish signal on break and close above 0.9772 and Thu/Fri tops at 0.9808 that would open way for further recovery and expose pivotal barriers at 0.9859 (Fibo 61.8) and 0.9866 (daily Kijun-sen).

Conversely, dip and close below 0.9718/12 (broken Fibo 23.6% of 0.9999/0.9631 / Fibo 61.8% of 0.9535/0.9999)) would weaken near-term structure and make the downside more vulnerable.

The euro should remain heavily impacted by sterling’s swings in the near term, and here the correlation appears to be stronger on the downside: i.e. the spillover from another sell-off in gilts would likely have an asymmetrically larger impact on the euro than the positive implications of a recovery in UK sentiment.

EURUSD Reaching for the Trend Line, Monitor Price Action

Oct 17 2022