Euro / U.S. DollarShort
EURUSD Bearish fundamentals
EURUSD has been exhibiting a clear bearish trend over the past few months, with significant resistance encountered around the 1.11 level. The RSI readings provide crucial insights into the pair's momentum. On December 27, 2023, we saw an RSI of 70.94, indicating overbought conditions that preceded a reversal. This pattern repeated on March 7 and 13, 2024, with RSI readings of 74.92 and 71.16 respectively, each time signaling unsustainable bullish momentum that gave way to subsequent declines.
The May 15, 2024 RSI reading of 72.57 once again marked a local top, reinforcing the importance of these overbought signals. By June 3, 2024, the RSI had declined to 67.87, suggesting weakening bullish momentum. The most recent reading on June 23, 2024, shows a dramatic shift with an RSI of 35.58, indicating a strong bearish move and potential oversold conditions.
Looking at key news events, the US CPI data release on April 10 triggered one of the most significant moves, with price action demonstrating a speed of approximately 3.22 pips per hour. The Non-Farm Payrolls report on May 3 also caused substantial volatility, with price movements reaching about 3.52 pips per hour.
If history repeats itself, we can expect the upcoming NFP report to cause similar volatility. Given the current bearish trend and low RSI, we might see a short-term relief rally if the data comes in weaker than expected. However, stronger than anticipated numbers could exacerbate the downward pressure, potentially pushing EURUSD to new lows.
The FOMC meeting minutes and the ECB interest rate decision are also crucial events to watch. Based on past performance, these could easily trigger movements of 2.5 to 3.5 pips per hour. The market's reaction will largely depend on the tone of these communications and any hints about future monetary policy.
Despite these potential short-term fluctuations, the overall trend remains bearish. The series of lower highs in the RSI readings over the past six months supports this view. Traders should be cautious of any rallies, as they may present opportunities for advantageous short entries, particularly if the RSI approaches overbought levels again without breaking the descending trendline.
As always, proper risk management is crucial, especially around these high-impact news events. The volatile nature of these releases means stops should be wider than usual, and position sizing adjusted accordingly. Keep an eye on the 200 EMA on lower timeframes for potential resistance levels during any relief rallies.
The May 15, 2024 RSI reading of 72.57 once again marked a local top, reinforcing the importance of these overbought signals. By June 3, 2024, the RSI had declined to 67.87, suggesting weakening bullish momentum. The most recent reading on June 23, 2024, shows a dramatic shift with an RSI of 35.58, indicating a strong bearish move and potential oversold conditions.
Looking at key news events, the US CPI data release on April 10 triggered one of the most significant moves, with price action demonstrating a speed of approximately 3.22 pips per hour. The Non-Farm Payrolls report on May 3 also caused substantial volatility, with price movements reaching about 3.52 pips per hour.
If history repeats itself, we can expect the upcoming NFP report to cause similar volatility. Given the current bearish trend and low RSI, we might see a short-term relief rally if the data comes in weaker than expected. However, stronger than anticipated numbers could exacerbate the downward pressure, potentially pushing EURUSD to new lows.
The FOMC meeting minutes and the ECB interest rate decision are also crucial events to watch. Based on past performance, these could easily trigger movements of 2.5 to 3.5 pips per hour. The market's reaction will largely depend on the tone of these communications and any hints about future monetary policy.
Despite these potential short-term fluctuations, the overall trend remains bearish. The series of lower highs in the RSI readings over the past six months supports this view. Traders should be cautious of any rallies, as they may present opportunities for advantageous short entries, particularly if the RSI approaches overbought levels again without breaking the descending trendline.
As always, proper risk management is crucial, especially around these high-impact news events. The volatile nature of these releases means stops should be wider than usual, and position sizing adjusted accordingly. Keep an eye on the 200 EMA on lower timeframes for potential resistance levels during any relief rallies.
discord.gg/a7sfTVkgxc
I’m part of a free Discord group where we help each other navigate the market and overcome trading challenges. It’s a friendly, supportive community, with members from around the globe.
I’m part of a free Discord group where we help each other navigate the market and overcome trading challenges. It’s a friendly, supportive community, with members from around the globe.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.