It’s business as usual in Europe, and that means EURUSD is under pressure yet again.
I highlighted the bearish engulfing bar in the weekend commentary, a price pattern that formed following the Fed’s decision to hold interest rates steady at last Thursday’s meeting.
It seems that Friday’s sign of weakness is staying true to form as the pair has now broken below trend line support off of the August 7th low.
This break could bring further weakness on an already bearish price structure that has been in place since March. That structure is best viewed on the weekly chart and hints at the possibility of a much lower EURUSD over the coming months and years.
So while today’s break is fairly insignificant in the grand scheme of things, it could end up playing a much larger role should the bears take full advantage of this continued weakness and drive the pair back to the channel floor that began in March.
Summary: Watch for bearish price action on a retest of former trend line support as new resistance. Key support comes in at 1.1154 and 1.1020 with a break below there targeting 1.0820. Alternatively, a close back above the trend line would negate the bearish bias and expose key resistance at 1.1365.
