EURUSD is in the process of retesting the area I mentioned over the weekend. The 1.1200 region includes a key pivot that dates back to early 2015 as well as former channel support that extends from the December 2015 low.
Additionally, the level is the 38.2% Fibonacci retracement when measuring from the December 2015 low at 1.0515 to the 2016 high at 1.1615.
Ideally, I’d like to see a clear rejection of the former support area as new resistance on a daily closing basis. Alternatively, a break below the intraday channel that has formed could be a sign that the relief rally has exhausted its resources.
Either scenario would indicate a shift in sentiment that could send EURUSD lower in the coming sessions.
The first stop on a move lower would be 1.1060 followed by post-Brexit lows near 1.0940. But regardless of the bids that develop at these levels, I remain quite bearish here and think that the 2015 lows near 1.0515 will come under fire again before year end.
As for upcoming event risk that could affect the EURUSD, Mario Draghi speaks tomorrow at 4 am EST and US non-farm payrolls (NFP) are scheduled for release this Friday at 8:30 am EST.
Both events could trigger an increase in volatility for the pair, especially the always dependable NFP, which never seems to disappoint when it comes to shaking things up for US dollar pairings.
Want to see how we are trading this setup? Click here to get lifetime access.
