EUR/USD – One final hurdle?

Larger correction looks very unlikely at this point

With the dollar remaining in favour after yesterday’s stronger US data, the ability of EURUSD to retrace back towards 1.20 is looking increasingly unlikely.

One last hurdle remains to the downside, the 76.4 fib (some may prefer the 78.6 but there isn’t a huge amount of difference). If this falls, any hope of a larger retracement is surely dashed.

This fib level falls around the lows we saw in late August which may increase its appeal as a possible support/rotation level. Whether it can then generate any significant upside is another thing, but it’s a start.

Ultimately, the pair is back in the channel and below all key moving averages on the daily and 4-hour chart. So it would appear a shallow retracement is all we’ve got. Time will tell if that’s the case and the Fed will probably have a massive role to play in that next Wednesday.

A dovish Fed, even one still warning of a taper, maybe enough to take the wind out the sails of the dollar rally and give the pair a lift. It’s a lot to ask but if it happens then 1.20, which feels so far away at the moment, may come back into play.

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

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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