EUR/USD Price Analysis: Absence of a bullish momentum favors a downside bias
- An absence of momentum in the upside move barricaded EUR/USD from kissing 1.1000.
- ECB Wunsch expects a continuation of the policy-tightening spell if labor demand remains strong.
- The Euro faced pressure while attempting a breakout of the Ascending Triangle pattern.
The EUR/USD pair has dropped after failing to test the psychological resistance of 1.1000 in the early European session. The major currency pair has sensed selling pressure amid an absence of momentum in the upside move. Also, a recovery move in the US Dollar Index (DXY) has impacted on the shared currency pair.
The USD Index has refreshed its day’s high at 101.82 after a recovery move. On a broader note, the USD Index is consolidating in a wider range of 101.63-102.27 for the past four trading sessions.
On the Eurozone front, European Central Bank’s (ECB) Governing Council member Pierre Wunsch said that the central bank will continue raising interest rates until wage growth slows. He further added, “I would not be surprised if we had to go to 4 percent at some point.” The labor shortage has been a major trigger for stubborn Eurozone inflation and it will continue to propel households’ earnings.
EUR/USD is auctioning in an Ascending Triangle chart pattern on a two-hour scale. The Euro has faced pressure while attempting a breakout near the horizontal resistance of the aforementioned chart pattern plotted from April 17 high at 1.1000. The advancing trendline of the chart pattern is placed from April 19 low at 1.0917.
On a broader note, the upward-sloping trendline plotted from March 24 low at 1.0714 will continue to provide support to the Euro bulls. Overlapping movement in the asset and the 20-period Exponential Moving Average (EMA) around 1.0970 conveys a lackluster performance for now
Also, the Relative Strength Index (RSI) (14) is trading back and forth in a 40.00-60.00 range, conveying a consolidation ahead.
Going forward, a break above the psychological resistance of 1.1000 will drive the asset to a fresh annual high at 1.1068, followed by the round-level resistance at 1.1100.
On the flip side, a downside move below April 12 low at 1.0915 will drag the asset toward April 10 low at 1.0837 and April 03 low at 1.0788.
EUR/USD two-hour chart
