EUR/USD Start Of The Year Outlook:
- The pair is scoping for another leg lower after finding resistance near 1.221.
- 1.1277 area is the next tough hurdle to overcome for the pair.
EUR/USD Start of the year outlook: Plummets below 1.1200
A new year has arrived, and so a new cycle has started for the financial markets. Which points to something interesting in terms of price action, despite the thin liquidity conditions on the first trading day of 2020. The common currency, however, is moving lower across the board after having found a strong resistance near 1.1221. Favouring a consolidation below the 1.1200 handle.
This move may open the doors to further declines targetting the 1.1113 zone where key support lies. Overall, it seems like the current lower leg could be taken as a corrective phase in the middle of a bullish consolidation ongoing above the 200 SMA in the 4H chart.
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Focus on the 1.13 handle
A run-up towards the 1.1221 level could happen in the short term. Where a breakout should prepare the escalation path and make a leg higher to test the 1.1277 area, next tough hurdle to overcome.
After clearing this level, eyes will be on the resistance region of 1.1335. Strengthening the bullish bias, and thus favouring a mid-term scenario for the bulls.
On the bearish path, a breakout below 1.1113 should favour another leg lower to test the 200 SMA, ahead of the support area at 1.1068.
Bullish trend line in sight
If EUR/USD manages to consolidate below the bullish trend line drawn from the lows of October 2019, all focus will be on the 1.0991 neighbourhood.
Technical oscillators are pointing downwards, with the RSI consolidating its slope below the 50 equilibrium area and momentum signalling a further bearish acceleration in the short term.