June didn’t work out to be a great month for EUR/USD. At the time of writing, the single currency looked on course to end the month down by 2.62% against the US dollar. May’s gains in hindsight look more like a cadaveric spasm than a serious promise of retracement or reversal of EUR/USD’s monumental fall this year. Twice in June, the pair has lunged uncomfortably close to the 1.0354 region, that once broken, would inevitably open the gates to parity. They follow two outright tests in May, preceded by similar tests in December 2016 and January 2017.
Conventional wisdom says the more an area acts as support and resistance, the more market significance it gains. For EUR/USD, that may prove more of a hinderance than help, should price experience a sustained break below those levels. Inevitably, some traders will read this as a potential near triple bottom in EUR/USD and they could be right. Despite all the forecasts of EUR/USD at parity, it still seems table to keep its head above water. That said, the more price hugs that critical support level, the more potential buyers should approach with bit of caution.
Equally, the sort of price congestion that has evolved over 1.047 to 1.056 range in recent month adds to calls for restraint. Rather than support a quick rejection of the 1.0354 region, buyers and sellers are showing some agreement that valuation should be close to that level. That is in sharp contrast to the quick rejection that happened in December 2016 and January 2017, which ultimately led to a sustained uptrend. Technical continue to marry with the fundamental narrative. The Fed is gung-ho on raising interest rates, whilst the ECB is still uncertain about its intentions after July.
