The euro fell to a 7-year low as expectations increase for the ECB to ease at their December 3rd Minimum Bid Rate decision. Bearish momentum remains strong and traders are eyeing the 1.05 support level. With the growing sentiment that the Fed will raise rates at their December meeting, the U.S. dollar may see further strength against the euro. If we see the ECB deliver additional quantitative easing or a deposit-rate cut and price settles below the 1.04 handle, we could see a clear path towards 1.0248.
The EUR/USD daily chart is displaying the strong bearish trend that has been in place since the May 2014 high of 1.3392. If price continues to trade below all three key SMA(s), we could see momentum drive towards the parity level. Major support comes from the trendline that started from the May 8th high. In the event we see price stabilize and bounce higher, initial resistance will come from the 1.07 level.
If expectations for the Federal Reserve to raise rates drops off drastically, we could see thea major short covering rally towards the 1.10 area.
The trade: Sell EUR/USD at 1.0700, with a stop loss at 1.0750 and take profit at 1.0550. The risk/reward ratio is around 1:3