After a half-hearted attempt to rise yesterday, which briefly took it back above 1.19, the EUR / USD pair was down again on Tuesday.
Recall that the Euro Dollar shows a correction from its peak on May 26 towards 1.2265. This correction was significantly accelerated last week, more precisely last Wednesday, following the Fed meeting more hawkish than expected.
EUR / USD continues to digest Fed meeting
Indeed, FOMC members had announced that it planned to hike rates as early as 2023, much earlier than previously anticipated. This strongly strengthened the Dollar, to the detriment of the EUR / USD pair.
Since then, few important events have been noted, Euro Dollar traders contenting themselves with digesting the prospect of a hike in US rates earlier than expected, while the ECB has for its part taken no step in this direction. .
EUR USD Technical Analysis
From a graphical point of view, it is interesting to recall that the drop observed since May 26 is part of a rejection from the upper limit of a long-term triangle, as seen on the graph daily below.
If the Euro Dollar continues to correct to the lower bound of this triangle, that assumes a target towards 1.1750, or at least 1.18. It is therefore not excluded that the fall in EUR / USD will worsen further. Conversely, for the currency pair's chart profile to start improving, a return above the major psychological threshold of 1.20 seems necessary.
Banks post bearish outlook for EUR / USD, mentioned 1.15 target
Another element that calls for caution on EUR / USD concerns the very cautious forecasts issued by banks recently.
Credit Suisse bank is among those who believe the current EUR / USD correction is not over:
“EUR / USD unsurprisingly saw a small rebound from the aggressive sell off last week, but we consider it temporary before a return to 1.1847, then support at 1.1833 / 23 – the uptrend from last year's March low and the 78.6% retracement of the March / May rally. ”
She also said a break below 1.1833 / 23 would pave the way for a further decline to 1.1760.
CommerzBank also hinted at a dip to further bearish targets in a note released on Tuesday. The bank estimated that a break below 1.1836 / 24 would target "the April 5 low of 1.1738 and the March low of 1.1704. "
Finally, supporting the reasons why the Dollar will continue to strengthen, Danske Bank reiterated its goal of a fall of the Euro Dollar to 1.15 before the end of the year.