EUR/USD: Downside move towards 1.11 in play

EUR/USD is creeping south in Asia, trading near the psychological 1.11 round number, with strength in the DXY the main theme in the far-east trading session so far. The pair saw multiple failures around the 1.1130, leading to the current retreat as the market turns slightly more risk averse in Asia.

EUR appeal damaged after Brexit

While the Euro is a borrowing currency that should perform decently under risk-off periods, it is wrth noting that the Brexit outcome has damaged the single currency's outlook, as the consequences of the UK leaving the EU is an evident negative input for the Euro bloc, and as such, from a macro standpoint, some adjustment in Euro valuations may still be needed, which suggests more erratic moves ahead, even if risk aversion kicks back in.

EUR/USD technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes: "In the 4 hours chart, the price has been consolidating above a now flat 20 SMA at 1.1055, the immediate support, whilst the technical indicators lack directional strength within positive territory, limiting the downside, but without signaling a possible upward move.'"

"The pair has scope to extend its recovery up to the 1.1160/80 region, the 50% retracement of the mentioned decline and the post-Brexit highs, although further gains are unlikely at this point" Valeria adds.