• Downleg in EURUSD continues, erases the summer rally
• It has easily overcome the key 200-day SMA
• Momentum indicators are representative of the decline's strength

EURUSD is trading aggressively lower today on the back of the ECB announcing another rate cut and the US retail sales report producing another upside surprise. EURUSD has easily broken below the 200-day simple moving average (SMA), almost entirely erasing the summer rally that pushed EURUSD to a 14-month high at 1.1213.

The strength of the current bearish move is clearly reflected in the momentum indicators. The Average Directional Movement Index (ADX) has climbed to the highest level since May 2023, confirming a very strong trend in EURUSD. Similarly, the RSI has crashed to its lowest level since September 2023, a reflection of the current bearish pressure in this pair. More importantly, the stochastic oscillator is hovering at the lower part of its oversold territory (OS), where it can stay for a while before attempting to climb higher.

Should the bears remain hungry, their next target will probably be the 1.0785 level, the informal target of the completed head and shoulders pattern. Even lower, the bears could test their appetite against a key support area at 1.0727-1.0735, which is populated with December 15, 2022 high and the 23.6% Fibonacci retracement of the September 28, 2022 – July 18, 2023 uptrend. If successful, the door could then be open for a move towards the 1.0635 level.

On the flip side, the bulls are desperately seeking to maintain a chuck of their summer gains. They could try to push EURUSD back above the 200-day at 1.0871, with the next key target being the 100-day at 1.0935. The path could then be clear until the busy 1.1032-1.1095 area.

To sum up, EURUSD bears have taken advantage of another strong US data print, pushing the pair to the lowest level since early August.