New Bear Channel May Mark EURUSD Reversal

Late last week, the EURUSD started to form a major reversal pattern by entering a new Bear price channel - see chart.

Overnight, increased levels of risk aversion prompted the USD to surge forcing the EUR/USD to a low of 1.4565 before bouncing of its channel bottom to a present value of 1.4650.

Since Sunday evening’s re-opening of the Forex Market, the GBPUSD continues its downward spiral now sitting at 1.5875. The UK economy is facing intense difficulties working its way out of recession which would be exacerbated by severe Government spending cuts due soon.

With no major risk events today and if the current pattern remains intact, then the EURUSD is likely to bounce of its channel’s ceiling before descending to test its key supports at 1.4560 and 1.4520.