Weakened EUR/USD poised for further slide
James Chen, CMT November 6, 2017 8:17 PM
The contrast has recently increased between a US Federal Reserve that has continued to confirm its path towards higher interest rates and a European Central Bank that has continued to postpone the end of its massive quantitative easing program. This sharpening contrast has helped to drive the EUR/USD pullback that has been in place for the past two months since early September, when the currency pair hit a multi-year high near 1.2100.
Since that high, the EUR/USD pullback has broken down below several key support factors, including a September breakdown below both its 50-day moving average and a major uptrend line extending back to April. More recently, late October saw the currency pair break down below the 1.1700-area "neckline" of a bearish head-and-shoulders pattern in the aftermath of the ECB's dovish policy announcement less than two weeks ago. After that breakdown, price action formed a bearish inverted flag pattern just above 1.1600 support, which was tentatively broken to the downside early Monday before losses were pared when the dollar subsequently dropped.
With any further sustained move below the noted 1.1600 support area, EUR/USD’s recent downside correction is likely to be extended. Such a breakdown could pressure the currency pair towards the next major downside targets at the 1.1450 and 1.1300 support objectives.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.