EURUSD remains under pressure as it extends its decline following a retracement from the September 8 peak of 1.2091, a level not seen since December 2014. Risk is clearly titled to the downside.
After the uptrend from the 1.08-area that started in April lost steam, the market made lower highs and lower lows as it drifted lower. The short-term bias turned increasingly bearish after prices dropped below the 50-day moving average.
EURUSD fell near support at 1.1661 on Friday before rebounding. A daily close below this level will increase the odds for a sustained move down to 1.1471. This level is around the 50% Fibonacci retracement of the rise from 1.0820 to 1.2091. A deeper decline would target 1.1290 and then from here focus turns to 1.0800.
Should momentum turn to the upside, the market would need to clear resistance at the 50-day MA and at 1.1900 in order to target the 1.2091 peak. Breaking above this resistance would open the way to the 1.23-handle.
EURUSD remains vulnerable to more weakness and the short-term bias is expected to remain bearish. Only a move back above 1.1900 would indicate the bearish phase has ended. Both RSI and MACD are in bearish territory, suggesting more downside is possible. But the flat RSI is pointing to some consolidation at current levels. A resumption of the short-term downtrend would change the bigger picture and shift the market structure from neutral to bearish
