September 14, 2022 01:53 AM ET
The EUR/USD pair retreated to 0.9985 in early European trading on Wednesday, after posting its biggest drop in two years the previous day. In doing so, the major currency pair is showing a pullback from key moving averages amid bearish MACD signals.
However, the recent low around 0.9950 could tempt EUR/USD sellers before directing them to the broad support zone between 0.9915 and the 0.9900 level.
Then, the yearly low near 0.9860 is less likely to challenge the pair's declines on their way to the October 2002 low near 0.9700.
Alternatively, recovery moves will first have to struggle to break through the resistance zone comprising the 100-SMA and 50-SMA, around 1.000-0.9990.
Even if the odds regain parity, the 50% Fibonacci retracement level of the August-September decline, near 1.0120, and the high of the last swing, near 1.0200, could test the EUR/USD bulls before giving them back control.
In summary, EUR/USD is bouncing off the last low, giving hope to the bears. However, the room for downside appears limited and thus could restrict the pair's short-term moves.