Watch for Key Support as Downtrend May Continue

Forex

Economic

Summary:

Tensions ahead of the French snap election have pushed the one-month implied volatility of EURUSD to its highest level in nearly eight months. This indicator reflects the risk of future price movements as inferred from option pricing.

SELL EURUSD

Close Time

CLOSED

1.06965

Entry Price

1.04460

1.07800

1.16717 -0.00036 -0.03%

11.0

Pips

Profit

1.04460

1.06855

Exit Price

1.06965

Entry Price

1.07800

Fundamentals

Market shifts have continued following the release of the U.S. CPI report on Wednesday. During today's early European session, the US dollar further strengthened. Tensions ahead of the French snap election have pushed the one-month implied volatility of EURUSD to its highest level in nearly eight months.

Polls indicate a risk of the far-right National Rally party, led by Marine Le Pen, winning the election, causing investor concern about potential deviations from EU fiscal rules by the party.

Investors now expect increased volatility in euro assets. If the party led by Le Pen comes to power, the 10-year yield spread between French and German bonds could exceed 80 basis points, leading to further declines in the CAC 40 index, French bank stocks, and the euro.

In the forex market, EURUSD fell 0.7% intraday, breaking below the 1.0700 level for the first time since May 2. It could approach 1.0600. Clearly, the euro is troubled by regional political issues, which may continue to drive the dollar's steady recovery. Signs of risk aversion in the market are also helping to support the dollar.

Watch for Key Support as Downtrend May Continue_1

Technical Analysis

After breaking below the 1.0718 support level, EURUSD is likely to continue its decline from 1.0601 to 1.0915. This downward movement is seen as another leg of pressure in the corrective pattern from the 1.1274 high. The pair is now likely to target the 1.0600 support level. A decisive break below this level will have bears eyeing the 1.0446 mark.

In the bigger picture, the price action from 1.1274 is considered a corrective pattern that may still be ongoing. Breaking below 1.0600 would target the 1.0446 support level and possibly even lower. Nevertheless, on the upside, a solid breakout above 1.1138 would indicate that the larger uptrend, starting from the 2022 low of 0.9534, is ready to resume through the 1.1274 high.

Trading Recommendations

Trading Direction: Short

Entry Price: 1.0700

Target Price: 1.0446

Stop Loss: 1.0768

Valid Until: 2024-06 - 29 23:55:00

Support: 1.0650, 1.0601, 1.0571

Resistance: 1.0720, 1.0746, 1.0816

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