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Talking Points:
- EUR/USD Technical Strategy: Flat
- Support: 1.3800-31 (former resistance, channel floor), 1.3680 (23.6% Fib ret.)
- Resistance: 1.3960 (23.6% Fib exp.), 1.3993 (channel top)
Euro selling has failed to materialize against the US Dollar thus far after prices put in a bearish Dark Cloud Cover candlestick pattern. Negative RSI divergence continues to warn of ebbing upside momentum but confirmation of reversal is absent. Breaking support in the 1.3800-31 area, marked by a former double top and a channel bottom, exposes the 23.6% Fibonacci retracement at 1.3680. Alternatively, a move above the 23.6% Fib expansion at 1.3960 aims for the channel top at 1.3993.
Our big-picture fundamental outlook continues to favor Euro weakness but we will continue to stand aside absent a defined sell signal, preferring to see a close below the channel floor to enter a short position.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com