EUR/USD remains trading in a narrow range with downside potential in the short term

ANALYSIS | 6/8/2022 12:10:43 PM GMT

• The EUR/USD pair consists of a head and shoulders formation, sending a downside signal
• The Moving Average of 21 crosses below the 50 period on the 4-hour chart
• The momentum oscillator’s relative strength index (RSI) stands in the neutral zone with light ascending upside momentum.

The EUR/USD edged higher in the initial European session. The major pair was trading in a narrow range after failing to sustain the ascending trend on Monday. At press time, EUR/USD was trading at 1.0705, up +0.00060 on a daily basis.

The European major pair consolidates in a narrow range since it couldn’t breach the 1.0757 resistance level on Monday. The previously mentioned resistance level stance has prevented the EUR/USD from further gains. Furthermore, market participants witnessed a slip in the euro towards the 1.0653 level yesterday before rebounding towards the critical resistance level of 1.0705.

This outlook relies on a four-hour timeframe

However, on the four-hour chart, the EUR/USD pair consists of a head and shoulders formation, which is usually followed by a bearish trend. On the other hand, the…