EURUSD – Will New Low Trigger Broader Decline?

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.

EURUSD Daily

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.

OANDA MP – Weak PMIs Hit Sterling (Video)

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.

EURUSD 4hr

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.

Historical Position Ratio

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.

Open Orders

To get access to the historical positions and order book tools, above, visit OANDA Forex Labs.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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.