EUR/USD – Cracks Another Big Support Zone
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- EUR/USD cracks key trendline
- Fibonacci convergence near 1.0850 now in focus
EUR/USD has come under fairly steady pressure since breaking below an important support confluence (200-day moving average, December high & 50% retracement year-to-date range) last week between 1.1060 and 1.1030. Subsequent weakness has seen other key levels of support eroded including the 61.8% retracement of the 2016 range, the 50-day moving average and the trendline connecting the January and February lows.
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On the surface it looks like the broader downtrend in place since May 2014 is indeed trying to reassert itself, but ultimately I will need to see long-term support symmetry (external parallel from 1985 synthetic low) around 1.0600 beached to confirm this thinking. The more immediate test for the market looks to be in the 1.0850 area as this marks a pretty clean convergence of the 61.8% retracement of the December - February advance and the 78.6% retracement of the year-to-date range. Traction below this key pivot zone would pave the way for a move to test year’s lows and likely set up an eventual test of the aforementioned 1.0600 area. The exchange rate is starting to show signs of being a bit oversold in the near-term so a minor upside reprieve over the next day or so would not surprise, but only unexpected aggressive strength back through 1.1060 would turn the technical picture positive in the euro.
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--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.