FX.co ★ EUR/USD Upcoming Reversal: Analysis for 20 July

• EUR/USD records new 3-month lows around 1.1765.
• Extra downside could see the 1.17 neighbourhood retested.

EUR/USD's downtrend gathers steam below the 1.1800 mark on Monday.While the upside remains capped by the 1.1880/90 band, further pullbacks remain in the pipeline.

Against this, the breach of the 2020-2021 support line (around 1.1770) would be an important bearish event and carries the potential to accelerate losses to, initially, the Fibo level near 1.1760 ahead of the 2021 low in the 1.1700 neighbourhood (March 31).

Further out, the near-term outlook for EUR/USD is seen on the negative side while below the psychological level today at 1.200. Moreover, 4-hour MACD has diverged in favor of the bulls. MACD histograms has produced higher lows , contradicting lower lows on the price chart. That bullish divergence indicates a potential for a corrective bounce which confirms the reversal pattern formation (a falling wedge) after the breakout of pattern.