EUR/USD: Scope for a substantial drop to the 200-DMA at 1.1985 – Credit Suisse

EUR/USD has set a top below key support at 1.2134/25 to warn of further weakness to 1.2053/51 – potentially the 200-day moving average (DMA) at 1.1985, the Credit Suisse analyst team reports.

Resistance is seen at 1.2135 initially

“EUR/USD weakness has accelerated sharply, reinforced by poor daily RSI and MACD momentum and key support from the recent low and 23.6% retracement of the March/May uptrend at 1.2134/25 has been removed to set a near-term top. We look for this to clear the way for further weakness within the broader sideways range for a fall to 1.2053/51 – the mid-May low and 38.2% retracement of the rally from late March.” 

“Whilst we look for the 1.2053/51 zone to hold at first, we now see scope for a move below here to the 55-day average at 1.2025, potentially the 200-day average and ‘measured top objective’ in the 1.2000/1.1985 zone, but with our bias to then look for a floor here.” 

“Resistance moves to 1.2135 initially, above which can see a move back to 1.2163, but with this ideally capping for now. Above can see a deeper recovery to 1.2208/18, but with a move above here needed to suggest the top has been negated.”