Key Highlights
- The Euro started a fresh downside move this past week and traded below 1.2350 against the US Dollar.
- There was a break below a major bullish trend line with support at 1.2400 on the 4-hours chart of EUR/USD.
- The pair has to stay above the 1.2180-1.2200 support area to avoid further declines.
- The US Wholesale Inventories in Dec 2017 increased 0.4%, compared with the forecast of 0.6%.
EURUSD Technical Analysis
After a decent upside move, the Euro found sellers near the 1.2520 level against the US Dollar. The EUR/USD pair started a fresh downside wave and traded below a key support at 1.2350.
Looking at the 4-hours chart, there was a double top pattern formed around the 1.2520-30 levels. The pair moved down and broke a major bullish trend line with support at 1.2400.
It opened the doors for more declines and the pair traded below the 1.2350 support and settled below the 100 simple moving average (red, 4-hours). The pair even broke the 1.2280 support and traded close to the 1.2200 level.
On the downside, the 1.2180-1.2200 area is a significant support. It acted as a major pivot region on many occasions and it could prevent declines in the near term. Moreover, the 200 simple moving average (green, 4-hours) is also positioned near 1.2180 to act as a support.
If the pair fails to hold the 1.2180 level, there may be further losses towards the next support at 1.2100. On the upside, an initial resistance is around the 23.6% Fib retracement level of the last drop from the 1.2522 high to 1.2205 low.
There is also a bearish trend line with resistance at 1.2300 on the same chart. A push above 1.2300 could take the pair towards the 50% Fib retracement level of the last drop from the 1.2522 high to 1.2205 low at 1.2364.
Today, there is no major economic release lined up in the Euro Zone and the US. Therefore, the market may perhaps follow a consolidation pattern before making the next move.
