EUR/USD started the week pushing to a new low on the month and year, at 1.2663, before finding support in the 9/29 European session. As we get into the 9/29 US session, the pair is pushing above 1.27, showing a bullish pullback attempt. However, as it tests 1.2710, it is rubbing up against some key resistance factors for the near-term.
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1) There is a falling trendline from last week’s high around 1.29.
2) The 50-hour simple moving average (SMA)
3) Also, the 1H RSI is at 60. If it turns back down from here, it would reflect maintenance of the prevailing bearish momentum.
It should be noted that this rally seems to have been on the back of Germany’s inflation data, which avoided the average forecast of a negative reading in September. It remained flat at 0.0%, which is not impressive neither, so one would have to wonder how strong the EUR can be based on a non-negative inflation reading.
Now, if there is near-term momentum and price does clear above 1.2720, it would break above these local resistance factors, and open up the 1.2760 level, 100-hour SMA and a previous resistance. The overall market in the medium-term would still be bearish, but we could be having some consolidation ahead of Thursday’s ECB meeting.
If EUR/USD price falls back below 1.2690, it is still pressured toward 1.2663, with downside risk even further. It should be noted that the 1.2660 level was a Nov. 2012 support pivot. Below this, we got some support/resistance pivots in the 1.24-1.2460 area, as explained below:
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The weekly chart shows that price has already broke below the 61.8% retracement of the 2012-2014 (1.2042-1.3993) rally. It also cleared the 2013 low of 1.2745, holding at the Nov. 2012 low for now. Below 1.2660, there is a support pivot at 1.24, a resistance pivot at 1.2442, and the 78.6% fibonacci retracement level at 1.2460.
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