EUR/USD Reaches 50% Fibonacci Retracement

The momentum in the pair is undoubtedly to the downside as depicted by the 5-DMA, but by analyzing the daily chart, there are a few factors that traders should be alerted by. First off, the fall in the Euro comes in the context of higher German vs US bond yield spreads, which means other elements aside from capital flows are driving the pair lower. The transition into lower levels has now landed at a key converging technical level circa 1.14, which aligns with the 50% fib retracement. Besides, a 100% target projection from 1.1475 (cutting through the wicks) to 1.1435 breakout point gives us a period of potential cycle maturity in the green box highlighted. In the short-term, also notice that the 25-HMA applied to the German-US bond yield spread is also turning its slope upwards. By assessing the volume tick patterns, notice the decreasing volume in the last 3 days? That’s a potential sign of exhaustion in a market that is offering enough credence not to rule out a turnaround, especially if the market finds acceptance above Tuesday’s POC at 1.1420.