EUR/USD: risk of a correction in the short-term increases, sales opportunity ?

© O Financista.

By David Wagner – After having increased its growth until a new annual summit at 1.1915 last Thursday, the EUR/USD pair has corrected, ending the week under the psychological level of 1.18, according to a report NFP on employment US higher than expectations which helped the Dollar to bounce back on Friday.

Has the reopening of the market last night, the EUR/USD has posted slight gains, until they hit 1.18 this morning in early european session, but the sellers are shown on this psychological threshold.

However, some analysts and several indices estimate that this correction of the EUR/USD could continue.

The tensions in China-US are positive for the Dollar

For example, according to an analysis of the japanese bank Mizuho published over the weekend, the rising tensions China-USA, and specifically the possible ban on WeChat in the United States, is expected to fuel a rise in the US Dollar via a flight to safe-haven securities, deeming such a decision “absolutely positive for the dollar” and “negative” for China “.

Mizuho has further noted that ” China’s ability to retaliate in kind is a bit more limited than that of the United States, at least in the short term.”

Selling EUR/USD, target 1.1430

For its part, Nordea bank has more clearly recommended the sale of the pair EUR/USD with a target at 1.1430 and a protective stop at 1.1940.

Nordea, however, has not abandoned his vision of a more long-term on the euro, stating that “the EUR/USD is likely to see a significant increase in the medium term”, emphasising that his council is for a short-term horizon.

Note that this view is bearish in the short term is based on a long position extreme on the Euro, the buying positions on EUR/USD has reached a new record last week, according to data from the CFTC released last Friday.

This suggests that the stock of new buyers that can enter the market is reduced more and more, involving the risk of a correction.

Technical thresholds to monitor

Finally, from a technical point of view, it should be noted that the EUR/USD pair is facing a resistance zone important, consisting of the psychological level of 1.18, the moving average 100 hours at 1.0805 and the moving average 200 hours to 1.1825.

If the weakness this morning (Monday) on the Euro continues, the next target bearish potential will be the low of last Friday to 1.1750 before the low last Monday of just under 1.17.

If EUR/USD manages to climb back above resistance of 1.18-1.1825, the area around the psychological level of 1.19 will be the first obvious goal.

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