Bearish Correction in Sight Following Deep Overbought RSI Readings

Forex

Economic

Summary:

The MACD shows a bullish histogram that is rapidly losing depth; although the signal lines remain inside positive territory, a bearish crossover would confirm the downside move.

SELL EURUSD

EXP

TRADING

1.16676

Entry Price

1.14720

1.17900

1.16628 -0.00001 0.00%

0.0

Pips

Flat

1.14720

Exit Price

1.16676

Entry Price

1.17900

Geopolitical tensions continue to take center stage across international markets. U.S. Treasury Secretary Scott Bessent is preparing to announce new sanctions against Iran, while Tehran warned that should what it terms an "economic war" waged by Washington persist, it could restrict oil exports through the Strait of Hormuz and other strategic Persian Gulf routes. This environment keeps inflation risks linked to elevated energy costs firmly intact.

Pressure on Iran intensified further after U.S. President Donald Trump announced that tariffs on automobiles, trucks, auto parts, and steel from Canada will rise to 50% starting January 1, 2027. Trump argued that Canada has benefited for years from its commercial relationship with the United States and urged affected companies to relocate production to U.S. soil to avoid the new tariffs.

These developments follow minutes from the Fed's latest meeting, which showed that multiple monetary policymakers remain concerned about persistent inflationary pressures. The document suggested that alongside officials like Beth Hammack, Neel Kashkari, and Lorie Logan, other committee members would also be open to supporting additional rate hikes if inflation fails to show further cooling.

In the Eurozone, the latest inflation figures showed stability, albeit with signs of persistence in select components. Germany's Harmonised Index of Consumer Prices (HICP) held steady at 2.8% year-over-year in July, matching market expectations. Nevertheless, analysts continue to point to energy prices as a primary driver of inflationary pressure, given that they continue to record above-average increases.

Investor attention now shifts toward Spain's inflation print and European Union industrial production data. Forecasts point to a modest improvement in manufacturing activity, with the annual contraction in industrial production expected to narrow from -1.2% to -0.8% for June.

On the other hand, services sector activity indicators delivered mixed results in July. In Spain, the HCOB Services PMI delivered a positive surprise by reaching 58.3, well above both the preliminary estimate and the prior reading, signaling solid expansion in business activity. In Germany, the Services PMI was revised slightly higher to 49.8, though it remained below the 50 mark that separates expansion from contraction. Meanwhile, Germany's Composite PMI rose to 51.3 and the Eurozone Composite index climbed to 52.0, pointing to a gradual recovery in private sector activity driven largely by the region's peripheral economies. Bearish Correction in Sight Following Deep Overbought RSI Readings_1

Bearish Correction in Sight Following Deep Overbought RSI Readings_1

Technical Analysis

EURUSD recently reached resistance near 1.1688—a level last visited on May 29, when price briefly touched the area before rejecting lower, serving as resistance once again in recent price action. For now, price has reacted to the downside in this zone without achieving a decisive breakout, suggesting a downside correction could unfold toward local support at 1.1472. Positioned nearby is the 100-period moving average at 1.1474, while the 200-period average sits at 1.1573; consequently, this support zone aligned with moving average confluence presents a logical downside target.

Turning to the oscillators, the RSI climbed to 71, moving clearly into overbought territory, where a downside rejection could materialize as these elevated levels invite a correction and allow sellers to establish positions. Meanwhile, the MACD shows a bullish histogram that is rapidly losing depth; although the signal lines remain inside positive territory, a bearish crossover would confirm the downside move.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1665

Target price: 1.1472

Stop loss: 1.1790

Validity: Sep 04, 2026 15:00:00

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data

Bearish Correction in Sight Following Deep Overbought RSI Readings

Technical Analysis

Risk Disclosure