The last forex day of August has brought an abundance of sellers the EUR/USD market. Price is trending south on intraday time frames, beneath the 1.1600 handle. In a live market update from Thursday, I issued a long trade recommendation from this level. Thus far it has performed miserably, with price pushing daily lows at near 1.1590.

A primary catalyst for the bearish action was the release of the Eurozone CPI (August) during the U.S. overnight. The hard data disappointed projections of 2.1%, coming in at 2.0%. Core CPI was the same story, underperforming estimates by 0.1%.

Key forex fundamentals are hard to beat, especially when it comes to a primary market mover. U.S. currency traders have taken the CPI numbers to heart, and long positions in the EUR/USD are in jeopardy.

EUR/USD Technicals

Today’s close is going to be a big deal for the EUR/USD. Price has pushed below the 62% current wave retracement (1.1608). Settlement under this level will set the stage for the bearish run to continue early next week.

Overview: At press time, it appears that we will have downside support set up near 1.1550 for Monday’s session. The Bollinger MP will be in this vicinity and may be tested during the coming European session. If the bears continue to dominate, then a long trade setup will likely come to pass.

Remember that Monday marks the U.S. Labor Day holiday. Be on the lookout for limited liquidity and participation on the forex. Directional moves are more likely to take place during the coming Asian and European sessions, not the muted U.S. holiday session.

I fully expect the markets to come out blazin’ on Tuesday, featuring a mass return of institutional money. Summer trading is drawing to a close — get ready for more action and volatility beginning with next Tuesday’s U.S. session.