Eurusd Drops Amid Dxy Strength

 Eurusd Drops Amid Dxy Strength

EUR/USD Drops To 1.700 Amid DXY Strength

The EUR/USD staged a recovery during Monday's session, but it came to an end as the DXY (Dollar index) regained strength once again. The sudden uptick in the DXY sent the EUR/USD lower near 1.0700.

Although the pair managed to find a bottom near 1.0705, it is still only 5 pips away from the 1.0700 level. Failure to uphold the 1.0700 level will open the gates toward the 1.0675, 1.0650, and 1.0600 levels.

According to experts, the EUR/USD price action can be traced back to the upcoming ECB decision and the recent US inflation data. The fundamental overview paints a blurry picture of the European Union, while the inflation data suggests improvement in the US economy.

EUR/USD D1 Chart Shows Bearish Momentum

Looking ahead, the EUR/USD is at a greater risk of more downside pressure, which will send it lower to 1.0685, which also happens to be September's low. On the daily chart, the EUR/USD appears to be geared towards the downside as it is trading below the MA (moving average) lines.

In particular, the 20 SMA, which highlights the short-term momentum, continues to trade below the big MA lines, which is a bearish sign. At the same time, most of the technical indicators have turned bearish with no near-term signs of exhaustion. Once again, this is an indication of more downside in the EUR/USD pair.

On the 4-hr chart of EUR/USD, it is currently sitting just a little higher than the 20 SMA. Furthermore, the 20 SMA is also flat, which is an indication of changing momentum in the 4-hr timeframe. In addition, the longer MAs continue to show a bearish slope, which is not good for the EUR bulls.

For the rest of the weekend, the support levels near the 1.0685 and the 1.0640 will be closely watched. In case of any moves below these levels, the next important level will be 1.0595.

On the upside, the markets will be closely watching the resistance zones at the 1.0720 and the 1.0755. In case of a stronger bullish momentum, the EUR/USD might even target the 1.0790 level.

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