Euro Holds Monthly Support But Deeper Losses Likely Ahead
TECHNICAL FORECAST FOR THE EURO: BEARISH
- Euro finished August narrowly avoiding monthly support break
- Shorter-term chart setup argues for renewed downside pressure
- Added further to short EUR/USD trade initiated near 1.24 mark
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The Euro narrowly avoided a break below monthly support near the 1.15 figure. Still, the decade-long down trend against the US Dollar remains very much intact as September gets underway. What’s more, nearer-term positioning suggests it may be just a matter of time before a breach opens the door for deeper losses.
The daily chart shows prices recoiling from resistance capping the upside since early June, paving the way for another challenge of support in the 1.1530-54 area. A daily close below that puts the August swing low back in the crosshairs.
Zooming in to the four-hour chart offers further confirmation and a greater sense of urgency as prices pierce below counter-trend support guiding the upswing from August lows and breach a secondary barrier marked by former resistance. That seems to set the stage for another challenge of the 1.15 threshold.
With this in mind, additional short EUR/USD exposure was added to the trade initially triggered at 1.2407 and subsequently scaled up near 1.19. The overall cost basis is now at 1.2153. A stop-loss will be activated on a discretionary basis.
--- Written by Ilya Spivak, Sr. Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
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