EUR/USD Tanks to Fresh Yearly Low as USD Strength Drives FX
EUR/USD, USD Talking Points:
- EUR/USD has broken down to a fresh yearly low, testing below the 1.1600 handle.
- US Dollar strength has continued following the breakout from the ascending triangle formation earlier this week.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
We’re in the final day of Q3 and over the past week US Dollar pairs have put in a significant move. It was after last week’s FOMC rate decision that matters began to shift, and as the Fed warned of potentially faster rate hikes than initially planned the US Dollar began to gain and, a week later, that theme hasn’t really stopped yet. This morning marks another fresh yearly low for EUR/USD following yesterday’s breakdown through the 1.1600 handle.
EUR/USD Daily Price Chart: Fresh Yearly Lows
EUR/USD Pauses After the Break
At this point, the pair has put in a pause after this week’s breakdown, highlighting short-term pullback potential in the pair. The zone of support above the 1.1700 handle put in multiple tests in the first nine months of this year and this can be re-purposed as resistance potential. On the way up to that zone, however, is another level of interest, plotted at around 1.1664, as this was the August swing-low in the pair. A pullback to either that price or the larger zone lurking just above can re-open the door for bearish strategies in the pair.
Underneath price action, there’s a big support zone just about 100 pips away. At 1.1500 is a major psychological level, and this is the same price that helped to hold the highs in March of 2020 as the pair was spiking wildly as coronavirus was getting priced-in. Just below the rounded level is a Fibonacci level at 1.1448 and, collectively, these price make up a zone of support potential underneath current price action, spanning from 1.1448-1.1500.
EUR/USD Daily Price Chart
--- Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.