The euro is having a rough start to the week. This is pretty apparent on the hourly time frame with a handful of bearish candlesticks that have formed from today’s earlier sessions. Right now, EUR/USD down more than sixty pips from Friday’s high.
However, it looks like there could still be hope for the euro to resume its rally. For one, Stochastic indicates a bullish divergence with price making higher lows while Stochastic is forming lower lows.
EUR/USD is also testing the 100 SMA for support. In fact, reversal candlesticks have already materialized hinting that the pair could be trading above 1.3400 sooner than we think.
Lastly, the area around 1.3390 coincides perfectly with the 38.2% and 50% Fibonacci retracement levels of the low from August 7 at 1.3336 to the swing high at 1.3432 where the pair topped out in August 8 when the NFP report from the U.S. disappointed expectations.
If there are enough buyers in the market, we could soon see EUR/USD make its way back up to 1.3450. However, don’t be too excited about buying the pair just yet. Note that the 200 SMA is 1.3380 and we could see a test of the indicator first before it rallies.
To contact the reporter of this story; Jonathan Millet at email@example.com