EUR/USD: Failure to hold a weekly close above 1.1797 warns of near-term exhaustion – Credit Suisse

EUR/USD has reversed its brief move above 1.1900 with the market seeing a weekly close back below its downtrend from 2008 at 1.1797. This adds weight to the view for a temporary pullback, with support seen at 1.1734/31 and then at 1.1655, per Credit Suisse.

Key quotes

“Even though EUR/USD managed to move briefly above 1.1900 on Friday strength was not sustained and the subsequent sharp retreat has seen the market close the week back below the long-term downtrend from the 2008 peak at 1.1797. This suggests the rally has become exhausted near-term and although our core outlook stays bullish, we now look for a consolidation/correction to emerge.” 

“Support is seen at 1.1734/31 initially – the 23.6% retracement of the rally from the late June low – below which should see weakness extend back to the 13 -day average at 1.1655, potentially the 38.2% retracement at 1.1627/22, but with this latter support then ideally holding.” 

“Post a pullback we would look for the uptrend to resume with resistance seen at 1.1797 initially and with 1.852/63 needing to be cleared for a direct move back to 1.1904/09. Above here in due course should see strength extend to our first major flagged resistance at 1.2145/55.”