EURUSD – Key Support Coming Under Pressure

On Friday I suggested that EURUSD may be bottoming out as it appeared to be forming a double bottom around a key level of support. However, having failed to break through the 1.1140 neckline, the double bottom was never completed and subsequently, the pair continued to head south.

Once again, we find ourselves trading around a key support level which should test the bears resolve and offer important clues as to whether the decline still has legs.

EURUSD Daily

That support is around 1.0975-1.10, which between the middle of December and January was an important zone of resistance.

Providing additional support is the ascending trend line from 3 December lows, while just below we have the 61.8% Fibonacci retracement level – 5 January lows to 11 February highs.

With this in mind, if the sell-off of the last week and a half was in fact just another retracement of the rally that began at the start of December, then this would be a logical level for the pair to once again catch a bid and the bulls regain control.

If the support is broken, it could open up a move back towards 1.08 which was a key support level for much of December and January, with further support being found around 1.07.

EURUSD 1hr

The hourly chart may support the latter with rallies over the last couple of days repeatedly being sold into at lower level resulting in a series of lower highs, while 1.0990 is once again coming under pressure.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.