EUR/USD was pressured at the start of the week as the US dollar gained for a second straight session on Monday. A rise in Treasury yields ahead of a slew of Federal Reserve speakers that, for the most part, have so far reinforce expectations of the start of asset purchase tapering before the end of the year is supporting the greenback. The US benchmark 10-year Treasury yields hit a three-month high of 1.515%.
This leaves a bearish outlook for EUR/USD for the immediate future and the following illustrates where the next downside opportunity could arise from continued pressures below critical resistance:
First and foremost, the M-formation is a bullish reversion pattern that has a high completion rate where the price would be expected to revert back to test the neckline of the pattern. This comes in neat 1.1770. However, so far attempts to the upside have failed which does leave the immediate focus on the downside.
As illustrated in the hourly chart above, the price has pulled back into resistance as marked by the 20-EMA and the confluence of the 61.8% golden Fibonacci level. While below the 200 and 50 EMAs, the price is in bearish territory, so this may be regarded as a discount to the bears targeting daily support near 1.1680 ahead of 1.1664.
At this juncture, bears will be monitoring for a break of the dynamic trendline support for a potential downside extension towards the said daily supports. However, bears would be prudent to note the hourly support below the dynamic trendline support at 1.1697 and only engage in full below there. Besides the daily supports, there are -272% and -61.8% Fibonacci retracements targets as being 1.1675 and 1.1667 respectively.
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