October 26, 2021

EUR/USD Plunges 70 Pips The Euro's Surprising Weakness

 The Euro continued to move weaker following dovish statements delivered by the European Central Bank (ECB) and gave room for the USD to show strengthening.

However, USD trading was seen to be still turbulent despite showing positive movement at the beginning of the week while investors were still waiting for important data for the US economic growth indicators towards the end of October trading.

Investors are also likely to take a cautious approach to the Euro in anticipation of the outcome of the ECB policy meeting to assess whether the European currency will continue to be dragged weaker or regain strength.

Not having time to look more ‘fierce’, the price movement on the EUR/USD chart is seen to be still constrained at the resistance of the weekly highs around 1.16700 to return to show decline in the European session (Monday).

The declining pattern presented has plunged over 70 pips until retesting the RBS (resistance become support) zone of 1.16000 before moving slowly in that zone at the end of the New York session.

The diving action has also broken the trendline support and resistance level of the Moving Average 50 (MA50) to give an early signal of a change in the bearish trend after continuing to flatten last week.

However, if the price movement continues to continue to decline, the 2021 low reached around 1.15300 is likely to be tested again if the resistance level of 1.16000 is successfully passed.

A more drastic downward trend will see the price continue to record the latest lows for 2021 which is expected to reach up to the support zone at 1.15000.

If the price is able to re -exhibit the previous uptrend, a clear probability will see the rise heading back to the 1.16700 high which often restrains the price spike.

The SBR (support become resistance) zone of 1.17000 remains the main focus to be achieved if the highest level is successfully broken.