Euro Gains Strong Momentum Towards Key Breakout: EUR/USD Technical Update Reveals Trendline and RSI Divergence

<p>The Euro has been under pressure against the <a href="https://www.googleadservices.com/pagead/aclk?sa=L&amp;ai=DChcSEwioy921iMCAAxV-EYMDHcShB14YABAAGgJzZg&amp;ohost=www.google.com&amp;cid=CAESbeD2nUXyL6YAJ3E_kQijiYhzoQBcnam7X2CWY5Z2JqIsCe6ir5JcsEjJpLiSQ4fQh2l7Fs5O04TetfP8VX8ega8W_odh1Xh22p3jZh37Ous3bHa1CVUsbvbxT5i_qX1eCPBOf4jy1GTEFaY3YGw&amp;sig=AOD64_1vTTTUMjLCex7XNPSPb2P92tp5FQ&amp;q&amp;adurl&amp;ved=2ahUKEwi_8Na1iMCAAxUWzjgGHYPlD7YQ0Qx6BAgOEAE" target="_blank" data-type="URL" data-="data-" rel="noreferrer noopener">US Dollar</a>, and the recent EUR/USD technical update suggest a potential bearish breakout in the EUR/USD currency pair. Traders and investors are closely monitoring key technical signals, such as the trendline breakdown on the daily chart and the emergence of positive RSI divergence on the 4-hour timeframe, which could determine the direction of the currency pair in the near-term.</p>

<h2>EUR/USD Technical Update: Daily Chart Breakdown and 4-hour RSI Divergence Analysis</h2>

<p>The daily chart is indicating a significant shift in trend dynamics, as the Euro closed below the rising support line that had been in place since late May. This break has raised concerns among traders, who now view the currency pair with a growing bearish bias. The focus is firmly on the critical support level at the July low of 1.0834. </p>

<p>A decisive breach of this level could intensify selling pressure and increase the probability of further downside momentum. In such a scenario, the market sentiment could turn increasingly bearish, and traders might start eyeing the May low of 1.0635 as the next key support level. A clear move below this level could pave the way for the Euro to revisit the lowest point it has not seen since March.</p>

<p>While the bearish scenario seems to be gaining traction, there is a glimmer of hope for <a href="https://in.investing.com/indices/investing.com-eur-index" target="_blank" data-type="URL" data-="data-" rel="noreferrer noopener">Euro</a> bulls. The 100-day Moving Average (MA) is positioned just below the July low, acting as a potential support level that might impede the Euro’s decline. The 100-day MA is widely watched by traders, as it represents a longer-term average and can carry considerable significance. If the Euro manages to find support at this level and bounce back, it could provide some relief to Euro bulls, potentially maintaining the broader upside bias. However, a confirmed break below the 100-day MA could significantly dampen the optimism and lead to further selling pressure.</p>

<figure><img decoding="async" width="1024" height="566" src="https://edge-forex.com/wp-content/uploads/2023/08/image1-2-1024×566.png" alt="" class="wp-image-8861" srcset="https://edge-forex.com/wp-content/uploads/2023/08/image1-2-1024×566.png 1024w, https://edge-forex.com/wp-content/uploads/2023/08/image1-2-300×166.png 300w, https://edge-forex.com/wp-content/uploads/2023/08/image1-2-768×424.png 768w, https://edge-forex.com/wp-content/uploads/2023/08/image1-2.png 1377w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: dailyFX</figcaption></figure>

<p>To gain better insights into the near-term trend, traders are delving into the 4-hour chart. Here, the trendline breakout is more pronounced, creating a clear support zone for the currency pair. This breakout is a crucial technical signal, but traders need to validate it on the daily chart to confirm its significance. </p>

<p>Alongside the trendline breakout, another notable development is the emergence of positive RSI divergence on the 4-hour timeframe. RSI (Relative Strength Index) is a momentum oscillator that measures the speed and change of price movements. Positive RSI divergence occurs when the price makes lower lows, but the RSI indicator forms higher lows. This divergence suggests that the downward momentum is losing steam, potentially signaling a forthcoming turnaround.</p>

<p>As the Euro approaches this pivotal juncture, traders must remain cautious of the possibility of a false breakout. If the trendline breakdown on the daily chart is not validated, the falling trendline from July might act as a formidable resistance level and sustain the near-term downside bias. In such a scenario, the Euro may find some temporary relief, but the broader bearish sentiment might still linger, leaving the currency pair vulnerable to further declines.</p>

<p>On the other hand, if the Euro manages to gather strength and clears higher, it could encounter its first significant obstacle at the 23.6% Fibonacci retracement level of 1.1124. Fibonacci retracement levels are commonly used by traders to identify potential reversal points based on the Fibonacci sequence. Surpassing this level would signal a potential shift in the short-term momentum and could pave the way for a retest of the July high at 1.1275.</p>

<figure><img decoding="async" loading="lazy" width="1024" height="566" src="https://edge-forex.com/wp-content/uploads/2023/08/image2-1-1024×566.png" alt="" class="wp-image-8862" srcset="https://edge-forex.com/wp-content/uploads/2023/08/image2-1-1024×566.png 1024w, https://edge-forex.com/wp-content/uploads/2023/08/image2-1-300×166.png 300w, https://edge-forex.com/wp-content/uploads/2023/08/image2-1-768×424.png 768w, https://edge-forex.com/wp-content/uploads/2023/08/image2-1.png 1377w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: dailyFX</figcaption></figure>

<h2>Conclusion </h2>

<p>In conclusion, the <a href="https://in.investing.com/currencies/eur-usd" target="_blank" data-type="URL" data-="data-" rel="noreferrer noopener">EUR/USD</a> currency pair is at a critical juncture, with technical signals suggesting the potential for further downside. The breach of the rising support line on the daily chart and the emergence of positive RSI divergence on the 4-hour timeframe are both important factors to consider. However, traders must remain cautious and vigilant, as false breakouts can lead to whipsaw movements and increased volatility. </p>

<p>Key support and resistance levels, such as the July low and the 100-day MA, will play a crucial role in determining the Euro’s near-term trajectory. The upcoming trading sessions are likely to be pivotal for EUR/USD traders, as they navigate through these critical technical developments.</p>

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