EUR/USD – More declines to come?

Major support below

A shallow correction is all the euro could manage earlier this month and since then, the dollar has been back in control.

The pair finally made new lows today which could potentially be the catalyst for much larger losses. But major support lies beneath.

The 200/233-week SMA band sits a little below 1.16 and a break of this would be a significant bearish signal, taking the pair below major support from late last year in the process.

This would then take the pair into big Fibonacci territory, with the 50% retracement – March 2020 lows to January 2021 highs – falling just below 1.15 and the 61.8% retracement a little below 1.13.

We may be getting ahead of ourselves though as the momentum indicators on the daily chart appear to suggest that breaking 1.16 could be a tall order, at least at the first attempt. Further divergence on approach will further support that view.

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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.