EUR/USD should continue to fall towards parity in the medium term
From a technical analysis perspective, EUR/USD broke key support at $1.0350 yesterday matching not only the May low, but also the 2017 low. Pulling back below this support is a sign of weakness of the euro which therefore opens the way to a continuation of the underlying downward trend.
The EUR/USD could continue to decline to the bottom of its declining channel and to the threshold of the euro-dollar parity over the next few weeks. Nevertheless, it will probably be better to wait for a “pullback” at the former support at $1.0350 or at the top of the downtrend channel to put in place selling strategies.
The euro’s underlying outlook would start to improve if there is an exit from the top of the channel, but this seems unlikely as long as the global economy is slowing and the conflict in Ukraine persists.
Entry: Sell between 1.0350 and 1.0300
Risk/reward ratio: >3
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