Article / 08 October 2012 at 10:37 GMT

EURUSD breaking down

John J Hardy John J Hardy
Head of FX Strategy / Saxo Bank
Denmark

The Friday attempt to maintain the 1.3000 level in EURUSD appears to have failed, as the pair is breaking back down through short-term support which may see it eventually retesting the 200-day moving average in the 1.2825 area.

It’s a big week for EURUSD, which closed right on the 0.618 Fibonacci retracement I mentioned prominently on Friday (at 1.3032) despite an attempt by the pair to rally beyond this level after the confusing US employment report and after the rather confused reaction to it (I remember my befuddlement as Gold futures were dropping rapidly, suggesting precious metals investors were pulling in their horns on the QE theme, but meanwhile the USD wasn’t responding much and the action in bonds and stocks was also inconsistent – though that situation was certainly rectified by the close of trading Friday as AUD tumbled and risk was more consistently off, with the Euro dragging its heels to follow suit).
Now we are getting a follow up move lower in EURUSD off the small reversal on Friday to start a week where the focus shifts back to the Euro Zone. See the chart below.

Chart: EURUSD
EURUSD has broken back below 1.3000, below the minor trendline and below the flatline support that was resistance on the way up in the 1.2960/70 area. This now sets up 1.3000 as resistance and may see a full test of the 200-day moving average and recent low near 1.2800 in the days to come.

eurusd

1y
fred seru fred seru
trend line from august has never disappointed...it may hold support perhaps?!

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