The euro has officially returned to parity against the dollar for the first time since 2002, but could soon rebound.

The EUR/USD could regain height from the parity threshold

In terms of technical analysis, the underlying trend is unquestionably bearish, but the configuration seems to be turning more and more in favor of short-term buyers since the EUR/USD has returned to a major support at parity, but also below the descending channel in which it has been oscillating since the beginning of spring and the daily RSI has been moving for several days in oversold territory.

Although oversold momentum is not a guarantee of a rebound, the risk/reward ratio tends to turn in favor of longs as we can see in the chart during previous oversold phases (green areas). The EUR/USD could therefore begin to seesaw close to the parity threshold and even rebound over the next few sessions, while a continuation of the decline seems the least likely scenario in the short term. In the event of a bounce, the first resistance to watch will be the former support at $1.0340.

Entry: Buy above $1.0100

Stop: $0.9990

Goal: $1.0300

Risk/reward ratio: 3

Follow the evolution of the EUR/USD price with IG.

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