EUR/USD is breaking a key support zone on the short and long time frames!
In case you missed it, European Central Bank (ECB) recently confirmed that it will end its bond-buying program in July.
More importantly, the central bank will also raise its interest rates by 25 basis points, marking its first rate hike since 2011.
And if that’s not hawkish enough for ya, ECB members are also planning to raise interest rates some more in September though the scale of the hike will depend on ECB’s inflation outlook.
The (mostly expected) announcement pushed EUR higher across the board including EUR/USD which hit intraday highs around 1.0770.
The good times didn’t last for the bulls, however. Concerns over high interest rates choking economic growth weighed on European stocks and eventually dragged EUR along with it.
EUR/USD broke below a short-term range support and is now trading below the 1.0650 mark.
Will EUR see more losses against USD?
EUR/USD’s downside breakout from its range confirmed a rejection from a trend line and 50% Fibonacci retracement resistance zone on the daily time frame.
It also doesn’t help EUR bulls that Stochastic has just left the overbought territory and that yesterday’s daily candlestick couldn’t be more bearish if it developed paws and roared.
Let’s see if today’s data releases lead to more EUR/USD selling. The U.S. is expected to print faster inflation from April to May. This would support the Fed’s aggressive tightening plans and likely create more demand for the safe-haven dollar.
Extended selling could drag EUR/USD to new monthly lows and/or May’s lows near 1.0400. The pair could even drop to parity as some traders are pricing in!
If you’re an intraday trader, don’t forget to pay attention to EUR/USD pivot points.
What do you think? Will EUR/USD drop to 1.0000 in the next few weeks? Or will enough bulls show up to break EUR/USD’s months-long downtrend?
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