How Far Will EUR/USD Fall?

02/15/2011 3:00 am EST

Focus: FOREX

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.

chart
Click to Enlarge

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

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