EUR/USD Daily Outlook

Daily Pivots: (S1) 1.3460; (P) 1.4014; (R1) 1.4327; More

EUR/USD gaps lower today and reaches as low as 1.3550 so far, just inch above mentioned short term target of 61.8% projection of 1.6038 to 1.3881 from 1.4867 at 1.3543. While some recovery might be seen at this level, consolidation should be brief and further decline is still expected as long as 1.3907 holds. Break of 1.3543 will encourage deeper fall to next medium term fibonacci level of 61.8% retracement of 1.1639 to 1.6038 at 1.3319. Above 1.3907 will indicate that a short term bottom is in place and bring lengthier consolidation before another fall.

In the bigger picture, sustained trading below 1.3851 medium term support will confirm that whole decline from 1.6038 has resumed. Next medium term target will be 61.8% retracement of 1.1639 to 1.6038 at 1.3319. So far, the strength of the fall from 1.6039 and the structure argues that it's something of a larger degree. The case of long term reversal is also building up. Nonetheless, note that EUR/USD is now at an important support zone with a) prior medium term high at 1.3668 (Dec 04 high); b) 38.2% retracement of 0.8223 (00 low) to 1.6038 at 1.3053 and c) 55 Months EMA at 1.3359. EUR/USD could at make a short term bottom between 1.30 and 1.36 stage a noticeable rebound before resuming the down trend. Hence, it's not advisable to chase decline when EUR/USD enters into this zone and profits on short positions could be taken if reversal signal occurs.

On the upside, a break above 1.4297 resistance will be the first alert term EUR/USD could have bottomed out in medium term term. Further break of 1.4867 resistance will confirm and bring larger scale consolidation before resuming the medium/long term down trend.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box