EUR/USD: free fall of European currency

EUR/USD: free fall of European currency

Current trend

At the end of last week the pair fell for more than 300 points amid expectations of decline in the interest rate by ECB. Yesterday investors’ premonitions were confirmed, as ECB has lowered interest rate up to 0.25%. Additional pressure on the pair was caused by the data on US GDP. This index went up to the level of 2.8% despite negative forecast. All these factors triggered the fall in the pair up to the level of 1.3300; however by the end of the trading day the pair has regained part of the losses and reached the level of 1.3410.
Statistics on the US labour market, which will be released today, is expected to be negative. This data can provide temporary and insignificant support to the pair.

Support and resistance

In the medium-term the pair will continue to decline; the first target of the “bears” is support level of 1.3300 (50% Fibonacci). MACD and Ichimoku indicators confirm the forecast of downtrend. MACD histogram has moved to the negative zone and is still below the signal line. The line Tenkan has crossed Kijun from top to bottom, forming a sell signal “Dead cross”

Support levels: 1.3300, 1.3210 and 1.3100.
Resistance levels: 1.3410, 1.3600 and 1.3830.

Trading tips

In the current situation it is advisable to place short positions with profit taking at the level of 1.3210.

Dmitry Likhachev
Analyst of LiteForex Group of Companies

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