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EUR/USD Technical Analysis: Euro Drops Most in 9 Months

EUR/USD Technical Analysis: Euro Drops Most in 9 Months

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro Accelerates Downward, Issuing the Largest Decline in 9 Months vs. US Dollar
  • Risk/Reward Considerations Argue Against Short Trade as Prices Perch Atop Support

The Euro continues to sink against the US Dollar having topped as expected following the formation of a bearish Dark Cloud Cover candlestick pattern. Bearish momentum accelerated following a dovish ECB monetary policy announcement, delivering the largest daily decline in nine months.

Near-term support is now in the 1.1070-1.1106 area, marked by the 61.8% Fibonacci expansion and a rising trend line, with a break below that on a daily closing basis opening the door for a test of the 76.4% level at 1.1015. Alternatively, a reversal back above the 50% Fib at 1.1180 – now recast as resistance – clears the way for a challenge of the 38.2% expansion at 1.1254.

We are keen to get short EURUSD in line with the long-term down trend. However, prices are too close to support to justify the trade from a risk/reward perspective at this point. We will remain on the sidelines for now, waiting for price action to offer a more compelling entry opportunity.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.