It has been a hesitant open on Wall Street with the U.S. indices slightly in the red. Traders are eagerly awaiting President Trump’s announcement regarding an extension of the Iran nuclear deal. While the equities markets are tepid, the USD is on the march against the majors. Big gains against the Euro, New Zealand dollar, Canadian dollar, and British pound have been the early-session highlights.

In a live market update from Monday, I outlined a key level of macro Fibonacci support for the EUR/USD. Today’s bearish action has brought this area into view.

EUR/USD Technicals

The daily chart for the EUR/USD is a textbook example of a downtrend. Price has yet to post a 38% retracement and has consistently broken out of consolidation to the bear.

If you are holding long-term shorts from mid-April highs, well done! The gains have been huge, over 500 pips. For now, there are three levels on my radar:

• Resistance(1): Psyche Level, 1.1900
• Support(1): Psyche Level, 1.1800
• Support(2): 38% Macro Retracement, 1.1708

Bottom Line: Last Friday I was calling for 1.2000 to be an area that was likely to draw both buyers and sellers to the market. This assertion has been proven false, as bearish sentiment continues to dominate the action by a wide margin.

For the remainder of the week, I will have buy orders queued up from just above macro support at 1.1711. This trade is a counter-trend play with a big upside. Using a 1:2 risk vs reward plan with an initial stop out at 1.1674, this trade is worth 74 pips on a short-term trend reversal.

Taking a counter-trend play with a large profit target is inherently risky. However, the EUR/USD is experiencing considerable action — if buyers defend 1.1708 in mass, a 100 pip bounce north is doable.