EURUSD: More Losses Favored As It Breaks Key Support

Technical Bias: Bearish 

Key Takeaways

• Euro dives to challenge the 1.3400 support area against the US dollar.

• A small pullback followed by a new low is a likely scenario in the short term.

• EURUSD support seen at 1.3350 and resistance ahead at 1.3460-80.

The Euro continued to struggle against the US dollar, as it fell to a new low yesterday. The market sentiment remains in the favor of Euro bears, which means more losses cannot be denied moving ahead.

Technical Analysis

There is a descending trend line on the 4 hour timeframe for the EURUSD pair, which acted as a hurdle for the Euro buyers on numerous occasions. The pair recently broke the last swing low of 1.3480 level, which was an important support area. The pair is likely heading towards the 1.236 extension of the last move higher from the 1.3472 low to 1.3992 high, which is at 1.3350. However, there is a possibility that the pair might retrace back closer to the mentioned trend line, which now coincides with the swing support of 1.3470. In that situation, the Euro sellers could reappear for a fresh leg lower in the pair. Only a break and close above retracement is possible.

Moreover, if the pair continues to move lower, then as mentioned initial support can be seen around the 1.3350 level. If buyers fail to defend this level, then a test of the 1.3300 pivot area might be on the cards. 

Euro Zone Consumer Confidence And Fed Rate Decision

There are a couple of economic releases lined up later during the London session, including the Spanish consumer price index, Spanish GDP, Euro zone consumer confidence and industrial sentiment. These events might cause volatility in the EURUSD pair. More importantly, the Fed interest rate decision is scheduled later during the NY session, which can cause swing moves in the US dollar moving ahead.