EURUSD Looks All Set For Bearish Reversal

Euro (EUR) extended upside movement against the US Dollar (USD) on Friday, increasing the price of EURUSD to more than 1.1375 following the release of some key economic news. The technical bias has turned bearish because of a Lower Low in the recent downside move. The pair is likely to pullback after testing the 1.1380-1.1400 resistance area in short term.

Technical Analysis

As of this writing, the pair is being traded near 1.1381. A hurdle may be noted near 1.1382, a key horizontal area ahead of 1.1400, the confluence of psychological number as well as swing high of the last major upside rally as demonstrated in the following four-hour chart.  Not to mention, a break above the 1.1400 resistance area would turn the bias bullish.

On the downside, the pair is likely to find a support around 1.1338, a key horizontal support area ahead of 1.1217, the swing low of the last major downside move. The technical bias will remain bearish as long as the 1.1400 resistance area is intact.

US Initial Jobless Claims

The number of Americans filing for unemployment benefits bounced back from a 42-1/2-year low last week, but the underlying trend remained consistent with tightening labor market conditions.

Initial claims for state unemployment benefits increased 9,000 to a seasonally adjusted 257,000 for the week ended April 23, the Labor Department said on Thursday. Claims for the prior week were revised to show 1,000 more applications than previously reported. Economists polled by Reuters had forecast claims rising to 260,000 in the latest week. Jobless claims have now been below 300,000, a threshold associated with healthy labor market conditions, for 60 weeks, the longest stretch since 1973.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around current levels appears to be a good strategy in short to medium term.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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