The EUR/USD is trading near the 1.15600 level early this morning and already a low of 1.15450 has been tested. Before going into the weekend, the EUR/USD sunk to 1.15350 after a sharp drop from the 1.16840 ratio was demonstrated. Intriguingly, the EUR/USD has shown little inclination to try and fill in this rather large void which it produced on Friday.
Yes, in the second week of October, the EUR/USD did test support levels near the 1.15300 mark and below on a couple of occasions. Contrarian traders who decide to point to the October lows and pursue reversals higher based on the notion the EUR/USD is entering oversold territory may want to pause for a moment, and contemplate long-term charts. Because prior to the October lows, the last time these price ratios were sincerely traded was in July 2020.
Technically, it may also be wise to note that the values seen in July in 2020 were seen as the EUR/USD reacted to a flurry of coronavirus implications which had hit in the months before. Meaning that technically speculators may want to reach back further and look at values from October 2018, which was the last time these lower levels functioned as serious support. Incrementally, the EUR/USD sank from that support until the early days of coronavirus concerns and actually reached lows near 1.06300 in March 2020.
The evidence produced above is not to say the EUR/USD is going to move towards those low water marks; however, it does demonstrate that the pair may have some momentum lower it can traverse. If current support levels near the 1.15500 ratios prove vulnerable, a test of 1.15400 to 1.15300 could quickly ensue. Technically, the EUR/USD has seen a whirlwind of choppy movement the past couple of days. Technical and nervous sentiment is combining, particularly as traders brace for Wednesday’s FOMC Statement from the U.S Federal Reserve.
Selling the EUR/USD short term continues to look like a rather logical wager. Traders should use targeted take profit orders to make sure their positions do not suffer reversals which make profits vanish. Market conditions may stay swift today and the remainder of the week. Risk management tactics will prove important.
EUR/USD Short-Term Outlook
Current Resistance: 1.15790
Current Support: 1.15530
High Target: 1.15930
Low Target: 1.15250
