EUR/USD: something seriously up with the bullish trend below 1.2000

Currently, EUR/USD is trading at 1.1752, down -0.06% on the day, having posted a daily high at 1.1771 and low at 1.1704.

EUR/USD is choppy and consolidating in a wide range after the highs that were recently reached at 1.1909. The choppy and series of lower lows from there is a sign that momentum is running out and an end of the bullish trend is nigh. 1.2000 as a psychological level may not be reached given various fundamentals. One of those is the ongoing tension between the US and North Korea.

S. Korea urges N. Korea to stop all actions that are raising tensions on the peninsula

The latest developments between the US and NK have sent markets into a mild risk-off environment. North Korea defied threats of “fire and fury” from Donald Trump yesterday in early Asia, deriding his warning as a “load of nonsense” and announcing a detailed plan to launch missiles aimed at the waters off the coast of the US Pacific territory of Guam. That boosted the safe haven assets and FX, derailing positive EUR/USD flows. 

Also, interest rates have been moving in the opposition to euro's bid for quite a while and US T-note spreads to bunds have been widening. Traders have been taking profits on long positions and it might be assumed that most of the long positions from, say, 1.1650, are profitable so there could be some more downside to come yet, especially should tomorrow's US CPI be in line with consensus or even more impressive. Moreover, if the euro could not rally significantly, relatively speaking, on today's PPI miss, then something is up with the bullish trend. 

EUR/USD levels

From a technical point of view, Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart shows that the price remains below a bearish 20 SMA, this last at 1.1770 reinforcing the strength of the daily high as resistance. 

"Technical indicators have barely bounced from their mid-lines, not enough to confirm further gains ahead, yet limiting the downside potential, as poor US inflation brings back to the table a conservative Fed ahead. Anyway, the pair would need to accelerate below 1.1690 to confirm a downward extension for today, with scope to test the 1.1650 region, although further declines beyond this last seem unlikely for today," Bednarik added.