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Talking Points:
- EUR/USD Technical Strategy: Pending short at 1.1809
- Euro breaks monthly uptrend vs. US Dollar, hinting near-term top in place
- Retest above 1.18 sought for improved risk/reward to enter short position
The Euro turned lower against the US Dollar after hitting the highest level since January 2015 as expected, with prices breaking the one-month rising trend. The selloff followed impressively strong US labor-market data that triggered a USD-supportive shift in Fed rate hike expectations.
From here, the next major layer of support is marked by the 38.2% Fibonacci retracement at 1.1608. A daily close below that exposes the 50% level at 1.1515. Alternatively, a reversal back above trend line support-turned-resistance – now at 1.1831 – paves the way for another challenge of the August 2 high at 1.1910.
Entering short at current levels looks to be unattractive from a risk/reward perspective. With that in mind, an entry order to sell EUR/USD at 1.1809 has been established. If activated, the trade will initially target 1.1608 and carry a stop-loss triggered on a daily close above 1.1910.
What will drive the longer-term trend in the Euro? See our forecast here!
