Credit Suisse analysts suggest that EUR/USD is poised to test significant support levels at 1.0557/1.0501.
The current decline in EUR/USD has temporarily paused, indicating a momentary break in the downward momentum. However, this is viewed as a temporary breather rather than a reversal.
Our negative short-term and 3-6 month outlook remains unchanged, targeting the lower boundary of the channel at 1.0557. Additionally, we identify crucial support levels slightly below this area, starting with the March low at 1.0524/16, followed by the 200-day moving average at 1.0512. Consequently, our bias is to find a bottom within the 1.0557/01 zone, initiating a new and potentially extended consolidation phase.
To maintain the downward pressure, it is preferable for resistance at 1.0739/81 to hold on a closing basis. Any potential recovery is expected to face challenges around 1.0832/34, possibly reaching the 55-day moving average at 1.0883, which is likely to act as strong resistance.
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