June 2, 2014 – EUR/USD (daily chart) has begun the month of June in negative territory with a continuing bearish bias below its 200-day moving average. Since the currency pair established its two-and-a-half-year high of 1.3993 more than three weeks ago in early May, EUR/USD has plunged substantially below both its 50-day and 200-day moving averages as well as the 1.3700 support level to end up in its current consolidation around the 1.3600 handle. The climb to May’s 1.3993 high fell slightly short of its 1.4000 upside target before dropping by almost 3% and disrupting the 10-month uptrend that has been in place since the July 2013 low near 1.2750.
Currently trading well below both its key 200-day moving average and the significant 1.3700 level, EUR/USD appears to be making its way down towards major support around the well-established 1.3500 support/resistance area. This 1.3500 support level also happens to be around the 38% Fibonacci retracement of the noted 10-month uptrend. In the event of a subsequent breakdown below 1.3500, further downside support resides around the 1.3300 level, last hit in November 2013. With any rebound and recovery to the upside, the key bullish objective remains at the noted 1.4000 level for a potential uptrend resumption.
James Chen, CMT
Chief Technical Strategist
City Index Group
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