EUR/USD – Correction underway?

Dollar pulls back after soft data

EURUSD entered into bearish territory a couple of months ago and after a strong run for the dollar, the pair finally found support around 1.17, where it bottomed at the end of March.

The UoM consumer sentiment survey fell to its lowest in a decade on Friday which appeared to encourage further profit taking in the greenback and, while it has pared losses a little today, there could be further to run.

The first obstacle to the upside lies around 1.18 – the 50% retracement of the move from 30 July highs to 11 August lows – (see 4-hour chart), which coincides with a cluster of moving averages.

A move above the 61.8 fib may signal that the correction has further to run with the next test coming around 1.19-1.1920 which coincides with the 30 July highs and 38.2 fib – May highs to August lows on daily chart .

A move above here will make things very interesting, with 1.20 falling around the 50 fib and moving average cluster on the daily chart .

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Craig Erlam

Craig Erlam

Former 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.