EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro recoils from 3-month trend resistance, eyeing September low
- Monthly close below 1.0980 may mean a drop to 1.05 may is next
- Invalidating near-term bearish bias needs a close above 1.1116
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The Euro recoiled from resistance guiding losses against the US Dollar since late June, slipping past the lower bound of a choppy congestion range. Sellers now aim to challenge the .0924-26 area,marked by September’s monthly low and the 38.2% Fibonacci expansion.
A daily close below this barrier targets the 61.8% level at 1.0809 next. Invalidating the near-term bearish bias is a tall order. Would-be buyers face back-to-back resistance levels running up from the 23.6% Fib at 1.0995 and through 1.1116, the outer layer of an infection zone in play since late April.
Daily EURUSD chart created in TradingView
The monthly chart underscores the Euro’s precarious position. With a mere three days of trade left in September, prices are dangerously close to securing a close below the four-year inflection point at 1.0980. That may well set the stage for a subsequent decline to test support clustered around the 1.05 figure.
Monthly EURUSD chart created in TradingView
Having said that, sellers are probably mindful of the adverse risk/reward implications of piling into shorts at a time when the currency pair sits within a hair of immediate support. Securing a daily close below 1.0924 is probably a prerequisite for lasting follow-through in the near term.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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