EUR/USD continues to move on a downward trajectory for the second successive session, trading lower near 1.0870 during the Asian session on Wednesday as the US Dollar (USD) continues to extend its gains. The strength of the USD is attributed to the market caution on the geopolitical situation and upbeat US bond yields. The current level aligns with the 38.2% Fibonacci retracement at the 1.0867 level followed by the major support at the 1.0850 level.
The 14-day Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements, for the EUR/USD pair, is positioned below the 50 mark, indicating a bearish momentum in the market. A break below the support region could put downward pressure on the pair to navigate the area around the psychological support at 1.0800 followed by the 50% retracement level at 1.0787.
Additionally, the trend-following momentum indicator “Moving Average Convergence Divergence (MACD)” line lies above the centerline, but shows a divergence below the signal line for the EUR/USD pair. This divergence indicates a potential shift in momentum towards a downward trend.
On the upside, the psychological level at 1.0900 serves as the immediate resistance, followed by the 14-day Exponential Moving Average (EMA) at 1.0938 and the major barrier at 1.0950 level, where the selling interest tends to outweigh the buying interest. If the EUR/USD pair manages to break above the 1.0950 level, it could inspire bullish momentum, allowing traders to explore the region around the psychological level at 1.1000. Beyond that, attention may turn to January's high at 1.1038 as a further resistance level.
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