EUR/USD: Will or will not?

by Valeria Bednarik | FXstreet.com

At this point, we are all wondering if the EUR/USD will or will not be able to finally break below the 1.3000 level. Despite some short term spikes below the strong psychological support, a huge battle is going on in between bulls and bears, and the pair holds barely above, as the first half of the year comes to an end. Indeed that’s a worrisome scenario for buyers, as we have not seen this Friday the usual profit taking and position adjustment, meaning that despite the level holds, bears are for now winning.

As for the technical stance, the daily chart shows a strong bearish momentum coming from technical readings, with price capped by the 61.8% retracement of its latest bullish run around 1.3050. Exposed to the downside on a break the weekly low of 1.2983, the pair has a 100 pips clean path towards 1.2880 next strong midterm support. Once below this last, next target comes at 1.2975, May 20th low converging with a daily ascendant trend line coming from September last year.

A change in direction  will be dependent on upcoming fundamental data from both economies, the ECB monthly meeting and US employment figures. Draghi needs to provide and outstandingly positive outlook and US data miss expectations, to revert the   downward momentum in the pair. Something in the middle won’t be enough and just produce short term noise. Key resistances for this week come at 1.3050, and 1.3105, being this last, the 50% retracement of the above mentioned rally. Only above this last the pair will be poised to revert the downward tone.

View Live Chart for EUR/USD