EUR/USD extends its sell-off to explore levels below 1.1600

The euro dives below 1.1600 for the first time in nearly 11 months.
US dollar strength is crushing the euro.
EUR/USD is testing a key support area at 1.1600.

Guillermo Alcala FXStreet

The euro is plunging about 0.7% on the day to hit lows below 1.1600 for the first time since November 2020. The pair has accelerated its downtrend after breaking below 1.1665 earlier on Wednesday, weighed by broad-based US dollar strength and concerns about Eurozone’s post-pandemic recovery.

USD strength crushes the euro

The solid rally on US bond yields, buoyed by expectations of the end of the Federal Reserve’s accommodative policy era, has boosted the greenback across the board. The US Dollar Index, which measures the value of the dollar against a basket of the most traded currencies, has appreciated about 1.35% over the last six days to reach its highest levels since November 2020.

In absence of other fundamental drivers, the energy crisis in Europe, caused by surging gas prices with inventories at historical lows, is raising concerns about the strength of the economic recovery in the Euro Area and is increasing negative pressure on the common currency.

EUR/USD: pushing against key support at 1.1600

From a technical perspective, the EUR/USD is now testing a key support level at 1.1600 (September and November 2020 lows). If the pair confirms below here, the next support might be at 1.1560 (50% Fibonacci retracement of the May 2020 – January 2021 rally) and 1.1500 psychological level.

On the upside, the pair should regain previous lows at 1.1670 (August’s low) and 1.1680 (September 23 low) to ease bearish pressure and aim towards 1.1750 (September 22, 23 highs).

EUR/USD daily chart

Technical levels to watch

EUR/USD

Overview
Today last price	1.16
Today Daily Change	-0.0083
Today Daily Change %	-0.71
Today daily open	1.1683

Trends
Daily SMA20	1.1783
Daily SMA50	1.1782
Daily SMA100	1.1901
Daily SMA200	1.1974

Levels
Previous Daily High	1.1703
Previous Daily Low	1.1668
Previous Weekly High	1.1756
Previous Weekly Low	1.1684
Previous Monthly High	1.19
Previous Monthly Low	1.1664
Daily Fibonacci 38.2%	1.1682
Daily Fibonacci 61.8%	1.169
Daily Pivot Point S1	1.1667
Daily Pivot Point S2	1.165
Daily Pivot Point S3	1.1632
Daily Pivot Point R1	1.1702
Daily Pivot Point R2	1.172
Daily Pivot Point R3	1.1737

Author

Guillermo Alcala

FXStreet

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

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