The Euro was unable to sustain itself above its resistance zone near $1.25445 in today’s early morning session and has come under extreme duress. The EUR/USD is currently taking support at its 100-day moving average, which is at $1.24772. Although the Greenback, experienced a bit of a sell-off in the morning after the dismal Japanese GDP data, was in fact able to recoup most of its losses.
Traders and investors should keenly follow the FOMC Minutes, which is scheduled to be released on Tuesday in order to properly understand the Federal Reserve’s next policy stance regarding short-term interest rates. Many leading economists are of the opinion that the strong U.S. economic reports over the past few weeks should empower the Fed to make room for an interest rate hike. Additionally, the U.S. CPI report will be released on Thursday at 14:30 GMT, which will almost certainly have an impact on the currency pair.
When looking at the hourly chart, the EUR/USD has been unable to sustain itself at higher levels with the next level of support coming in at around $1.24708. Additionally, its momentum indicators are giving clear sell signals, which are undoubtedly bearish indicators. Furthermore the DAX’s relative strength index is additionally providing a strong sell, clearly specifying a swing towards the sell side. Many analysts believe that if the EUR/USD falls below the $1.24708 level, it will witness a strong sell-off, dropping it at approximately $1.23945, which would be a new low for the already battered currency pair.
Short the EUR/USD at current levels for an intermediate target at $1.23945, with a strict stop-loss above $1.25445.
Long the EUR/USD if it moves above $1.25445, for an intermediate target at $1.26120.