EUR/USD outlook: Close below key Fibo support could spark bigger drop

Slobodan Drvenica Windsor Brokers

EUR/USD

The Euro remains in red on Thursday and extends weakness to the new 2021 low, hitting the lowest level since July 2020, following nearly 1% drop on Wednesday (the third biggest daily fall this year).

Higher than expected US inflation in October boosted expectations that the Fed may start tightening earlier than expected, increasing demand for the US dollar and putting the single currency under increased pressure.

Wednesday’s massive bearish candle weighs, with strong bearish signal being generated on break and close below pivotal support at 1.1492 (50% retracement of 1.0635/1.2349 advance) that increases risk of acceleration towards 1.1290 (Fibo 61.8% of 1.0635/1.2349).

Broken Fibo support (1.1492) reverts to initial resistance (repeated daily close below to confirm break and validate barrier), with former low at 1.1525 marking next significant level which should ideally protect the upside and keep bears intact.

Res: 1.1492; 1.1525; 1.1559; 1.1586.
Sup: 1.1454; 1.1400; 1.1420; 1.1395.

Interested in EUR/USD technicals? Check out the key levels

1. R3 1.1676
2. R2 1.1636
3. R1 1.1557
PP 1.1517
1. S1 1.1438
2. S2 1.1399
3. S3 1.1319

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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