Technical Analysis – EURUSD drops to a two-year low
- The aggressive decline in EURUSD continues
- EURUSD reached its lowest level since November 2022
- Momentum indicators are fully onboard with the current selloff
EURUSD is experiencing its fourth consecutive red session, dropping to the lowest level since November 2022. The selloff from the late September highs got a significant boost from Trump’s win, helping the dollar outperform its main rivals, including the euro. The weak set of eurozone PMIs and the hawkish rhetoric from Fed members have played a key role in current price action, with euro bulls desperately trying to find a strong support level to mount their defense.
The current bearish move is supported by the momentum indicators. The Average Directional Movement Index (ADX) is edging higher, confirming a strong bearish trend in EURUSD, but remains well below its recent highs. Similarly, the RSI has crashed to its lowest level since September 2023, reflecting the current bearish pressure on this pair. Interestingly, the stochastic oscillator is hovering inside its oversold territory (OS), where it can stay for a while before attempting to climb higher.
Should the bears remain hungry and willing to extend the current selloff, they might have to overcome the support set by the 50% Fibonacci retracement of the September 28, 2022 – July 18, 2023 uptrend at 1.0315. If successful, the door could then be open for a move towards the 1.0090-1.0131 range, which is the final obstacle before parity.
On the flip side, the bulls are desperately trying to halt the current selloff. They could try to keep EURUSD above the 1.0315 level, and then gradually push it towards the busy 1.0481-1.0571 region, which is populated by the February 27, 2023 level, the 38.2% Fibonacci retracement and the November 15, 2022 low. This is a key area for short-term momentum, and hence a climb above it could mark the start of a recovery in EURUSD towards the 1.0635 level.
To sum up, EURUSD bears remain in control, taking advantage of every data point, and thus pushing the pair to a new two-year low.
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