EUR/USD pulls back after sharp surge

<p>EUR/USD (daily chart) has pulled back to hit a low around the key 1.3000 support today after yesterday’s dramatic surge that shot the price up […]</p>

EUR/USD (daily chart) has pulled back to hit a low around the key 1.3000 support today after yesterday’s dramatic surge that shot the price up from a low below 1.2800 support to a high near 1.3200. That surge temporarily helped EUR/USD recover back up to around the 62% Fibonacci retracement of the strong bearish leg that had been in place for the prior three weeks. The current pullback after that recovery represents an exhaustion of the sharp upside move.

Two key support/resistance levels should dictate which direction the price may follow after the spike. To the downside, a re-break below 1.3000 would indicate that yesterday’s surge was little more than a bullish retracement within a larger bearish trend. In this case, the currency pair has downside support objectives around 1.2800, 1.2650, and then 1.2450. In the opposite event of a breakout above the 1.3200-area high, a new bullish leg will have formed, with a key upside resistance objective around 1.3400.


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