EUR/USD Technical Analysis: Euro Hits 2-Year Low, May Extend Drop
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro down to 2-year low vs US Dollar as Trump invites currency war
- Confirmation of near-term support break may set up probe below 1.09
- Monthly chart positioning hints prices flirting with a major breakdown
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The Euro has cleared August’s swing bottom, dropping to the lowest level in two years against the US Dollar. The unit wilted against the backdrop of bellicose comments from US President Donald Trump, who seemed to be inviting an EU-US currency war late last week.
Sellers are now testing below the 76.4% Fibonacci expansion at 1.0955. A break below that confirmed on a daily closing basis opens the door for a challenge of the 100% level at 1.0864. The August 1 low at 1.1027 has been recast as near-term resistance.
A rebound that brings prices above this barrier – again with confirmation on a daily close – brings the exchange rate up to a series of back-to-back upside hurdles starting at 1.1069. Neutralizing immediate selling pressure probably requires a close above falling trend resistance set from late June, now at 1.1149.
Zooming out to the monthly chart for a somewhat broader perspective, EUR/USD managed to close out August with a narrow hold above the four-year inflection level at 1.0980. The barrier may give way if sellers’ current momentum is sustained however, putting the 1.0459-1.0563 zone into focus.
Monthly EURUSD chart created in TradingView
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.