ECONOMIC FAMINE (PART 2)OVERVIEW
The EUR/USD pair is locked in a strong downtrend, with major resistance at 1.13835 and critical support at 0.6155.
A break below 0.8931 could signal severe economic implications.
Technical indicators, including moving averages and oscillators, are predominantly bearish, with recent patterns hinting at a potential short-term bullish recovery above 1.0610, targeting levels like 1.0710, 1.0960, and 1.1320.
Fundamentally, interest rate cuts by the ECB and Fed are key drivers of recent price action, keeping the pair in a narrow range.
Long-term forecasts predict further euro weakness, making this a crucial time for traders to manage risk effectively.
Position traders should watch for potential breakdowns below key support, while short-term traders may find opportunities in bullish momentum above resistance levels.
TECHNICAL ANALYSIS
The EUR/USD pair is experiencing a pronounced downtrend on the monthly timeframe, marked by significant pivot points:
Pivot High: 1.16164
Resistance Level (Major): 1.13835
Resistance Level (Minor): 1.0630
Support Levels: 0.6155 (critical) and 0.5633 (pivot low).
A close below 0.8931 would confirm a larger, catastrophic economic downturn, with price movements potentially signaling a "Global Economic Famine."
Oscillators
Indicators such as RSI (42.91), Stochastic %K (34.56), and Commodity Channel Index (-167.50) remain neutral, suggesting low momentum for a strong reversal in the short term.
Momentum (-0.030) and MACD Level (-0.00416) indicate sell signals, aligning with the bearish sentiment.
Moving Averages
All major EMAs and SMAs across periods (10 to 200) are aligned as sell signals, emphasizing the persistent bearish trend.
The Ichimoku Base Line at 1.05029 is neutral, providing limited support for bullish recovery.
TECHNICAL PATTERN OBSERVATIONS
A double-top formation at 1.1200 in September signaled bearish control, supported by a death cross in EMAs.
Recent inverse head-and-shoulders at 1.0333 suggests a potential bullish recovery if the price sustains above 1.0610, targeting 1.0710, 1.0960, and 1.1320
FUNDAMENTAL ANALYSIS
Interest Rate Outlook:
In 2024, expectations for central bank rate cuts influenced the EUR/USD trading range between 1.0600–1.1210.
The European Central Bank (ECB) initiated a rate cut in June (4.50% to 4.25%), while the US Federal Reserve followed in September (5.50% to 5.0%).
Forecasts & Risks:
Long-term projections for 2026-2027 show the euro likely declining to 1.0250–1.0300, with adjustments possible based on macroeconomic shifts.
If resistance at 1.0630 is broken, the EUR/USD may target the 1.0960–1.1260 range. However, failure to maintain these levels will reinforce the broader bearish trend.
STRATEGIC TAKEAWAYS
Position Traders: Watch the critical support at 0.8931—a breach signals significant economic risks.
Short-Term Traders: Closely monitor the 1.0610 level. Bullish action above this may present buying opportunities toward 1.0710, 1.0960, and 1.1320 but bearish dominance remains strong.
