EUR/USD Falls Out Of Bed, Support Levels In View
Shain Vernier • 2 min read
The EUR/USD is trending south for the session, challenging the 1.1650 handle. Traders have sold the Euro in response to weaker-than-expected German CPI (YoY, August) released during the U.S. pre-market hours. The number came in at 1.9%, well under the previous release (2.1%) and projections (2.0%). When taken in concert with the U.S. Core Personal Consumption Price Index (YoY, July) hitting the mark, it is little surprise that the EUR/USD is trading in the red.
Of course, things are always about to change on the forex. The economic calendar for the U.S. overnight brings the E.U. CPI (August) report. Analysts expect the number to come in unchanged at 2.1%. Perhaps a strong E.U. CPI release will draw some bids to the EUR/USD by Friday’s closing bell.
EUR/USD Technical Outlook
The daily chart for the EUR/USD pretty much sums up today’s action. A big red candle is forming and downside support is coming into play.
It looks as though the four-session bullish winning streak for the EUR/USD is going to end upon the forex close. If the intraday bear run continues, then several support levels may come into play in the next 24 hours:
- Support(1): 62% Current Wave Retracement, 1.1608
- Support(2): Bollinger MP, 1.1556
- Support(3): Daily SMA, 1.1484
Bottom Line: At press time, the EUR/USD is pushing intraday lows south of the 1.1650 area. To capitalize upon the sell-off, a long position from just above the 62% retracement is a viable entry. Until Friday’s close, I will have buy orders in the queue from 1.1611. With an initial stop at 1.1574, this trade produces 25 pips using a sub-1:1 risk vs reward scenario.
Convergence of technical indicators is always a good thing. While the 62% retracement (1.1608) stands alone, the proximity to the round number of 1.1600 gives credence to its potential effectiveness. With a bit of luck, this trade will go live ahead of the E.U. CPI release.