Bearish pressure continues to weigh on EUR/USD

<p>EUR/USD spent much of the month of February in a relatively tight consolidation just off the new eleven-year low of $1.1100 that was hit in […]</p>

EUR/USD spent much of the month of February in a relatively tight consolidation just off the new eleven-year low of $1.1100 that was hit in late January. On a rebound from that low extreme, early February saw the currency pair hit a high of $1.1533 before retreating and spending the rest of the month essentially range trading.

In the course of February’s trading range, EUR/USD has formed a clear consolidation pattern within a steep, ten-month bearish trend. This downtrend has pushed the currency pair dramatically lower by more than 20% from its long-term high just short of $1.4000 in May of 2014 down to the noted $1.1100 low in late January.

The current consolidation has formed a rough triangle or pennant pattern near the long-term lows. Coupled with EUR/USD’s continuing downside trend pressure, this pattern hints that the currency pair could well have significantly further to fall in the near future.

With continued euro weakness and only a relatively modest respite in US dollar strength as we near the end of February, bearish pressure continues to weigh on the EUR/USD pair.

The month of March should likely see either an extension of the current consolidation pattern or a clear breakdown below the long-term lows. In the event of the former scenario, major upside resistance on any further drift higher within the consolidation stands firmly around the key $1.1650 level. In the latter setup, any sustained breakdown below the noted $1.1100 support level could see a further decline and trend continuation targeting the key 1.0800 objective to the downside.

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