EUR/USD has failed at the key technical level of 1.0944/48 and holds short-term momentum divergence, which points to the potential for a short-term sell-off, economists at Credit Suisse report.

Short-term momentum turns lower on the back of a bearish divergence

“We continue to look for a top at 1.0944/48 for now and for a deeper setback over the next week or so, especially with short-term momentum turning lower on the back of a bearish divergence, with first support at 1.0767/36. Below here would trigger a deeper short-term sell-off, with support then seen next at the 55DMA, currently at 1.0618, which is the most we can envisage the market falling at this stage.”

“Bigger picture, our bias recently shifted and we now look for an eventual break above 1.0944, post a pullback, with next resistance at 1.1185, potentially the 61.8% retracement at 1.1275.”