EURUSD has come under increased pressure after dipping another leg lower to break below the head and shoulders neckline at 1.1660. The drop below what was considered to be a key support level with strong downside momentum indicates that the market has moved into a bearish phase and further weakness is expected.
Prices have currently stabilized around 1.1615 and the 1.1470 level is expected to provide solid support. From here, the focus would shift to key levels at 1.1300 and 1.1100 ahead of the 1.0820 low.
Immediate resistance is now provided by previous support at 1.1660. Rising above this important level would target the area around 1.1845, which is where the 50-day moving average has provided a barrier during the past month. Thus, rising above this resistance would indicate the short-term bearish phase has ended and EURUSD would be on the path to re-test the 1.2091 multi-year high that was hit on September 8. Clearing this point would confirm the resumption of the uptrend that started from 1.0820.
In the near-term, EURUSD is vulnerable, with risk clearly tilted to the downside as RSI is bearish below 50. The technical break of the head and shoulders neckline (1.1660) suggests downside risks remain.