MujkanovicFX

EUR/USD: Three signs of a 1.12 retest

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FX:EURUSD   Euro / Dólar Americano
Hi traders, here we have the EUR/USD pair which faced some selling pressure this morning. Let's see what's next for the market.

TECHNICALS:
The lower 1.14xx levels look like an important upside barrier at the moment. This can also be seen on the 1-hour chart, where the RSI is forming a bearish divergence in the short-term.

The strong selling pressure building up suggests that a downside breakout below the rising trendline could see further weakness in the pair and a possible retest of the lower 1.12xx levels.

RISK SENTIMENT:
Most major stock indices are down for the day, and the S&P will possibly be no exception (check out my recent post on the S&P 500). This could add to more USD strength.

INTEREST RATES:
Interest rate differentials (chart below), based on the 2y German and US yields, continue to point lower for the pair. Another sign for further weakness in the pair.


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