EUR/USD on daily charts broke below the all important zone of $1.33462 which bulls had been able to take support from for the last couple of weeks. Most traders have now shifted their focus to Jackson Hole and the Federal Reserve Minutes which would be released on Wednesday. Traders believe that the strong economic reports from the US economy and the Federal Reserve on course to unwind the quantitative easing programme might be a strong enough reason for the Fed to raise short term interest rates. This would be bearish for the Euro as an already flagging eurozone growth has forced the European Central Bank to think about additional stimulus to be able to safeguard itself from an economic collapse in near term. The inflation report from the US which was largely in line with expectations was also cited as a reason for the dollar to gain strength against the euro and push it towards a fresh 9 month low against the greenback.
On the charts for the EUR/USD, the break of the all important support zone at $1.33462 is being taken as an ominous sign and makes traders believe that the currency can head lower in near term. The momentum indicator for EUR/USD has given a fresh sell signal and formed a lower high which is line with the price action which also formed a lower high confirming the momentum to have shifted directly in the hands of the bears. The resistance on the upside for the currency pair would come around $1.33977 and should be used as a stop loss for traders shorting the currency pair.
Short EUR/USD with a stop loss at $1.33977 with an immediate term target at $1.31057
Go long on the EUR/USD only if it breaks above $1.33876 with a target at $1.34629 with a stop loss at $1.33462