The euro has taken a turn lower against the dollar late in the European session, falling to its lowest level since 24 June, when it tanked on news that the U.K. had voted to leave the E.U.
The pair had established a relatively tight trading range over the four weeks following the result – between 1.10 and 1.1160 – and it seems the constant pressure on the range support in recent days has proven too much for the bulls.
Source – OANDA fxTrade Platform
A break of this support level could now trigger another push lower, with the next test coming around 1.0910, the lows of 24 June.
While this may offer some support, the break of 1.10 could indicate that a larger move to the downside has been triggered, with 1.08-1.0820 being the next major zone of support for the pair.
For now, the pair has found temporary support around 1.0970, the lows of 27 June, but I think this could prove to be temporary, with the break of 1.10 potentially adding to the bearish sentiment. A daily – and therefore weekly – close below 1.10 could further add to this.
Despite reducing their short exposure, OANDA clients remain net short on this pair as it hit a new four week low.
There also appears to be a number of long and short open orders around 1.0950 which could suggest this is going to be an interesting level.
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