EUR/USD opened with a gap lower before recovering to near 1.1200
Escalating trade tensions saw the dollar bid in early trades with the pair slumping to a low of 1.1159 after opening with a gap lower from Friday's close. But since Asian trading, the pair managed to fill the gap and rise to a high of 1.1200 before encountering resistance at the 100-hour MA (red line), where upside is limited currently.
That puts price in between both key hourly moving averages with the 200-hour MA (blue line) resting at 1.1175 currently. This means that the near-term bias is now more neutral.
The simple thinking is that the dollar should be bid on haven flows in light of the risk-off sentiment and while that is mostly the case so far today, it hasn't really extended to EUR/USD price action for the most part.
Perhaps large expiries around 1.1150-60 is helping to limit downside for now and perhaps euro short positioning staying at its most stretched since December 2016 is also playing a part. But the one thing you can always rely on for clues is the chart.
Right now, it says that near-term bias is undefined and as such, we have to wait on a break to confirm the near-term direction. I find the pair's resilience rather surprising and that is something to be wary about for those looking for a downside extension.
In any case, the pair remains in a downwards channel in the bigger picture so until there is reason to fundamentally see the euro sustain an upside momentum - which for now I don't see much reason for that - it's hard to argue for a more bullish run to break above the key downwards channel below:
Price may test the limits of that in the near-term but I will stick with a sell-on-rallies approach with the pair so long as price continues to respect the levels above.
