The daily chart for EUR/USD shows the key breakdown of the 1.3500 level within a strong overall downtrend, and after a key consolidation over the past month. Despite oversold conditions highlighted by the Slow Stochastics oscillator, price now may appear poised to test 1.3380, which is the 50.0% Fibonacci retracement of the July 2013 low (1.2753) to the May 2014 high of 1.3992.
The directional bias from a technical perspective continues to be bearish and may ultimately see price finally find support around the heavily tested 1.3250-1.3280 region. The fundamentals will support this direction if we continue to see the yields on US Treasuries (10-year) remain bid until 2.70%.
Today’s economic calendar will shed light on whether higher inflation persists in the U.S. and if housing recovery is slowing down. Positive prints at or better than expected forecasts could prove supportive for the U.S. currency.
The trade: Sell EURUSD at 1.3490 with a stop loss at 1.3540 and a take profit at 1.3390. The Risk/Reward Ratio is 1:2
Edward J. Moya
WorldWideMarkets Online Trading