EUR/HUF Faces Resistance at 399/402, Indicating Possible Pullback Towards 372 and 367
The currency pair of the euro and the Hungarian forint, EUR/HUF, has recently faced a resistance level at the 200-day moving average (DMA) near 399/402. According to analysts at Société Générale, a break below this level could lead to further losses towards 372 and 367.
EUR/HUF has been trading within a multi-month channel, but its recent upward momentum has been stymied by the aforementioned resistance zone. Société Générale analysts have pointed out that a sustained move above 399/402 will be needed to affirm an extended bounce, indicating that the pair is currently facing a significant challenge.
The 76.4% retracement level from the low formed earlier this month is currently at 379 and is considered to be interim support for the currency pair. The possibility of a failure to defend this level has led to predictions of a deeper down move towards 372 and possibly towards the lower limit of the aforementioned multi-month channel at 367.
While still showing some strength, EUR/HUF’s current technical picture suggests a more cautious approach to its trading.
Multi-Month Channel in EUR/HUF
Over the past few months, EUR/HUF has been trading within a multi-month channel, with its price movements constrained by the upper and lower limits of this channel. In this context, it is not surprising that the recent resistance at the 200-DMA has been challenging for the currency pair.
According to Société Générale, the lower limit of the channel is currently at 367, which means that EUR/HUF may face some further downside in the coming days if it fails to hold the 379 support level.
Indicators for EUR/HUF
In terms of indicators, the relative strength index (RSI) for EUR/HUF is currently below the 50 level, indicating that the bears may have the upper hand in the near term. Additionally, the moving average convergence divergence (MACD) has been trending lower, suggesting that downside pressure is increasing.
However, it is also worth noting that the MACD is near its oversold level, indicating that a bounce could be in the cards if buyers step in to defend the current levels.
EUR/HUF and the Global Market Context
The current technical picture for EUR/HUF is indicative of the wider global market context. Investors are still assessing the impact of the ongoing coronavirus pandemic on the global economy, and the recent surging cases in Europe have led to renewed fears of lockdowns and other restrictive measures.
Additionally, the upcoming US presidential election is also causing some uncertainty in the markets, with many investors unsure of what the outcome will be and what it will mean for the global economy.
In this context, it is not surprising that EUR/HUF is facing some challenges. However, despite these challenges, the currency pair still offers opportunities for traders who are willing to carefully assess their risk and be mindful of the wider context.
Conclusion
EUR/HUF has been facing a resistance zone at the 200-DMA near 399/402, which must be overcome to affirm an extended bounce. Failure to do so could lead to further losses towards 372 and 367, which are considered interim support and the lower limit of a multi-month channel, respectively.
While the technical picture for EUR/HUF is currently challenging, it should be noted that the global market context is also uncertain, with the ongoing pandemic and the upcoming US presidential election causing volatility in the markets. As such, traders should be careful to assess their risk and be mindful of the wider context before making any trades.
