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The US Dollar might be readying to extend losses against the Euro. On the daily chart below, EUR/USD has closed under the 100-day Moving Average (MA). While confirmation is lacking at this time, further downside progress could offer an increasingly bearish technical bias. EUR/USD also closed at its lowest since early July.
From here, immediate support is the July low of 1.0834. A downside breakout exposes lows from May and June. Otherwise, a turn back above the 100-day MA and a false breakout places the focus on immediate resistance at 1.1003, which is the 23.6% Fibonacci extension level. Further gains above that may open the door to revisiting the July high.
Zooming in on the 4-hour chart can give us a better idea of how the near-term trend is shaping up. On this timeframe, we can see how EUR/USD confirmed a breakout above near-term rising support from June. Meanwhile, falling resistance from July has been helping maintain the downward technical bias. On this chart, immediate support can be seen better as the 1.0833 – 1.0859 support zone.
If this area holds, it could send prices higher toward a retest of the falling trendline from July. This could maintain the near-term bearish technical bias. Otherwise, a breakout higher exposes the 23.6% Fibonacci retracement level of 1.1124. On the other hand, a breakout and confirmation of immediate support exposes the 78.6% level of 1.0771 as prices fall towards 1.0634.
--- Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
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