EURUSD has been one of my least favorite currency pairs in 2016. In fact, I think I’ve only traded it a couple of times the entire year, mostly due to the sideways price action that has been in place for the past twenty months.
But for those interested in playing short-term moves within this range, the single currency may be gearing up for a run at post-Brexit lows.
I’ve had the 1.1200 handle in my weekly forecasts for several months, and while the pair has been chopping back and forth around this area, today’s intraday break has become a bit more important.
First, 1.1200 has acted as a pivot since May. On a daily closing basis, the level has been respected on at least eight separate occasions.
Second, the trend line that extends from the July low at 1.0950 intersects this area, adding a bit of confluence to the horizontal level.
And third, it’s the 38.2% Fibonacci retracement when measuring from the post-Brexit low of 1.0910 to the August high at 1.1365.
So there you have it, three good reasons why the 1.1200 handle may carry more importance today than it has in the recent past. With that said, only a daily close below the level would open up downside levels for next week. Anything that happens intraday is trivial especially as volatility picks up.
Critical support levels to keep an eye on for next week include 1.1060 as well as the July lows at 1.0950. As for upcoming event risk, next Wednesday’s Fed rate decision is sure to shake things up for the US dollar, so be sure to manage any USD exposure accordingly.
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