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Talking Points:
- EUR/USD Technical Strategy: Flat
- Euro Launches Sharp Recovery Against US Dollar on China-Inspired Risk Aversion
- Waiting to Re-Establish Short Position in Line with Dominant Bearish Trend Bias
The Euro soared against the US Dollar to reclaim a foothold above the 1.09 figure after China-inspired risk aversion fueled unwinding of carry trades funded in the single currency. Notably, the down trend marked by the series of lower highs and lows established from mid-December remains intact.
From here, a daily close above falling trend line resistance at 1.0936 opens the door for another challenge of the December 15 high at 1.1060. Alternatively, a push back below the horizontal pivot at 1.0819 paves the way for a test of the January 5 low at 1.0711.
Our short EUR/USD position from 1.0747 has been stopped out but the dominant trend continues to favor the downside from both the near- and long-term perspectives. With that in mind, we will move to the sidelines and monitor price action for another selling opportunity in the days ahead.
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