- The market has been trading above a bullish trendline since mid-Arpil ; the mid-term trend was then bullish.
- During the last few trading sessions, the pair has been put under significant pressure as prices registered a sharp pull-back from 1.0916 to 1.0720 currently. This sell-off led the market to a bearish break-out of its mid-term bullish trendline, invalidating the mid-term bullish trend.
This sudden move can be explained by two factors : 1) An increased appetite for the USD currency, taking place ahead of key US CPI data and an FOMC decision on rate, both due tomorrow. 2) Rising political uncertainty in Europe after far-right movements in Germany, France, Italy and Austria secured much more seats than expected in EU parliament during last Sunday's elections.
- This is seen as a bearish situation for the pair. The mid-term bullish trend is now officially invalidated and the market's inability to bounce back highlights the fact that sellers are in control. Next support zones can be located towards 1.0720, 1.0667 before the crucial 1.0600 level. However, we expect the market to remain volatile as investors brace for tomorrow's key macro data from the US.
Pierre Veyret, Technical Analyst at ActivTrades
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