FXStreet notes that EUR/USD has seen an abject failure to hold its break above key resistance at 1.1916/26, with daily RSI and MACD momentum never confirming the new highs. Therefore, economists at Credit Suisse are set for a more protracted consolidation phase. The immediate risk is seen lower with support at 1.1811 then 1.1783/78.

“EUR/USD has seen an abrupt reversal and rejection of its break to new cycle highs above 1.1916/26 and with daily RSI and MACD momentum having failed to even make new highs and thus hold bearish divergences, this suggests it has been too soon to look for a direct resumption of the uptrend and instead it looks like we are set for a more protracted corrective phase prior to the uptrend resuming.” 

“Below support from the 13-day average at 1.1811 on a closing basis can add weight to this view with support then seen next at 1.1783/78 – the lows from the end of last week and 23.6% retracement of the rally from late June – which we would look to try and hold at first. A break can expose the beginning of what we see as more important support, starting at 1.1721 and stretching down to 1.1710.”

“Resistance is seen at 1.1893 initially, with a move above 1.1923 needed to ease the immediate downside bias for strength back to 1.1949/53, then 1.1966 and eventually 1.2145/55.”