EUR/USD: Gains expected to falter – Westpac

In view of Tim Riddell, Research Analyst at Westpac, triple divergence in daily momentum flags the risk of corrections for EUR/USD pair, should range resistance cap the extended gains off 1.0570 (close below 1.14 risks 1.1150).

Key Quotes

“If dips can be avoided, retests of 2016’s highs (1.1615-1.1715) could be seen but within the context of defining a higher, but consolidative, trading range”

“Weekly

• Weekly momentum avoided rolling-over but remains at extremes. This bodes caution as range resistance is tested
• Weekly closes above 1.13 have reduced deep retracement risks, but stretched momentum and extended price action both highlight potential for corrections”

“Monthly

• A strong upswing in monthly momentum is accompanying the test of horizontal resistance. This raises the potential that a base may have formed
• Although a long term base may have formed, a prolonged period of effective range trading is still likely before a more directional/dynamic move can develop”