Following a breach of the rising trend line from the January low, the EUR/USD looks set to retrace its gains from this year.
The 100-day moving average has so far provided support, but the failure of the pair to make new highs shows a lack of bids in the market for the euro. Falling long-term Stochastics on the weekly chart also support a move lower.
Currently, the pair is approaching the 38.2% Fibonacci retracement (1.3480) from the January-to-February move, which coincides with the recent support range the pair has found between the levels of 1.3480 and 1.3500.
A breach below this level should target the 61.8% Fib retracement at 1.3250. This level lines up nicely with the mid-January pivot of 1.3240.
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Resistance may be found at the falling trend line off of this year’s high, which comes in today at 1.3660. The high from February 9 at 1.3740 also stands out as a possible resistance level.
By Russell Glaser of ForexYard.com
