The EURUSD just closed back below the 1.1875 key level. We’ve had our eye on this area ever since the pair closed above it on August 25.
We’d expect it to now serve as support given last Friday’s close above it. However, yesterday’s 1.1835 close has traders questioning the validity of last week’s bullish break.
In fact, I’ll be watching to see how the pair reacts to 1.1875 should we get a retest over the coming sessions. If the area is still of importance, which I believe it is, then we will likely see Euro bears defend it over the next 24 to 48 hours.
Keep in mind that the single currency could also catch a bid near 1.1810/15. It’s the short-term trend line that extends from the recent swing low at 1.1553.
A close below that could very well take us back to the 1.1670 handle. It’s a level we’ve discussed many times in recent weeks as it served as both support and resistance since late July.
If we get a daily close at 5 pm EST back above 1.1875, I will consider removing the level from my chart. But at the moment, Tuesday’s close suggests that Friday’s breakout was false and that a turn lower is likely.