EUR/USD: What’s next after 10-day losing streak?

EUR/USD is trading on a positive note around 1.06 handle after having suffered a ten-day losing streak on the ‘Trump Bump’ and due to the increasing political uncertainty in Europe.

Technical correction or further sell-off?

Charts could be screaming ‘oversold’ and thus a technical correction cannot be ruled out, however, the Euro side of the story is increasingly looking weak.

The ECB is widely expected to boost easing in December. Meanwhile, the constitutional referendum to be held on December 4 in Italy is widely seen as the one that could make or break the Euro project.

Also note, the US-German 10-yr yield spread is at the highest in over a decade. Thus we can conclude that upticks (corrective rallies) could be met with fresh offers, unless the dollar side of the story suddenly takes a ugly turn.

EUR/USD Technical Levels

The spot was last seen trading around 1.06 handle. A break above 1.0620 (Thursday’s low) would open doors for 1.0648, above which the pair may target 1.0742 (23.6% of 1.13-1.0569).

On the other hand, a failure to hold above 1.06 could yield a revisit to 1.0569 (Friday’s low), under which the psychological retest 1.05 handle.