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.
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.
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.