EURUSD: downtrend is intact
EURUSD continues its recovery on Friday, with the key reason behind the corrective rebound is the widespread dollar weakness amid a retreat in the 10-year US Treasury yields and a better risk-on tone after the recent sell-off. The pair has reached the 20-DMA just above the 1.1670 area, where the rally has exhausted for the time being.
As there are no any fundamentals behind the ongoing ascent in EURUSD except for profit-taking on USD longs, we see the recovery as selling opportunities because the monetary policy divergence theme remains one of the strongest arguments against the euro rise. Moreover, the euro zone economy continues to show signs of a slowdown, and political risks in Italy may yet reemerge just like yesterday.
So, despite the pair still looks oversold, it is still attractive for selling on any rallies and could fall to fresh 2018 lows should the dollar bulls get back in the game. The short-term technical picture has improved a bit since yesterday, but in broader terms, the bearish trend remains firmly intact. In the nearest future, the euro may retreat from the mentioned moving average and derail the 1.16 figure once again.