Looking at the daily we can see that 1.1705 is a strong level for buyers. This level has held since November 2020. Since then we have seen one bounce in March and three touches in August.
Yesterday, US retail sales missed expectations with the core figure dropping to -1.1%. Fed chair Powell’s comments early this morning also hurt risk due to their hawkish tone. Markets will be looking to the Fed meeting minutes and if we will see any plan in tapering.
Could the minutes be a fail nail in the support coffin for the EURUSD? A break lower continues to confirm the last lower high and suggests a new continuation lower that could maintain the current medium-term down trend that remains in play. If we do see an extension lower could buyers put up some fight at support 2 if reached?
If momentum turns back to buyers a new hold at this level will continue to maintain buyer control from 1.1705 and reinforce buyer numbers in defending the level.
To us, it’s a crossroads in a way for the EURUSD and it’s going to be interesting to see if sellers can take the next step.
Recommendation: Sell/Sell limit @ 1.17500 Target/TP: 100+ pips Trailing Stop: 20 pips
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