The recent bearish breakout in EUR/USD has added further fuel to its corrective phase, according to George Davis, Chief Technical Strategist at RBC Capital Markets.
Davis says the daily close below support at 1.1862 (flush with the 200-day moving average) has reasserted corrective momentum, exposing 1.1746 on the downside (Chart 1). Below 1.1746, a key double bottom at 1.1612 comes into view.
To the upside, Davis says the trendline at 1.1865 and a double top at 1.1990 serve as initial resistance, followed by 1.2113. EUR/USD would have to register a daily close above 1.2188 in order to end the current corrective phase.
Within G10 FX, Davis uses a Relative Rotation Graph to observe EUR/USD, NZD/USD, AUD/USD and GBP/USD are all weakening, while USD/JPY and USD/CHF reside in the leading/strengthening quadrant (Chart 2).
