EUR/USD Retreats and Pulls Back to Key Support

<p>EUR/USD (daily chart shown below) has retreated after advancing within the past month to reach a three-month high of 1.1465 late last week. Since mid-April, […]</p>

EUR/USD (daily chart shown below) has retreated after advancing within the past month to reach a three-month high of 1.1465 late last week.

Since mid-April, the currency pair had been rebounding from a rough double-bottom chart pattern around the 1.0500 support area. This chart pattern occurred after a long and sustained bearish trend from the 1.4000-area high in May of last year down to mid-March’s new 12-year low of 1.0461.

The rebound from those lows lifted EUR/USD above key resistance levels, including 1.0800 and 1.1100, as well as the important 50-day moving average. A month-long rising trend line was also formed.

2015-05-20-EURUSD daily chart

 

This week, on renewed dollar strength, the currency pair has dropped below the rising trend line and pulled back down to key support around the noted 1.1100 level.

Any further drop below 1.1100 could begin to re-assert EUR/USD’s bearish trend, with the next major downside target back down around the 1.0800 level. To the upside, any rebound from support should be limited in the short-term by the 1.1400-area resistance.

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