May 12, 2022 08:55AM ET
By: AnalysisWatch
The EURUSD fell below the swing area that has capped the trading range since April 27. After an up and down yesterday, it finally closed with a minus, and this momentum continued in the Asian trade.
On the hourly chart, the pair has been moving between 1.0470 and 1.064 cents since April 27. Between these extremes, there has been a range between 1.0567 and 1.05769.
At around this time yesterday (shortly after the CPI), the EURUSD rate fell below the 100/200-hour moving averages (blue and green lines), but failed to sustain the downward momentum. The price started to rise again and moved back above the converging 100 and 200 hour moving averages (blue and green lines in the chart above). The top extended and returned to the above mentioned fluctuation area between 1.0567 and 1.05769, where it met willing sellers for the second time that day. The buyers turned into sellers and let the price fall below the above-mentioned moving averages again. This time the price stayed below these levels and closed near the lows.
The EURUSD hit its low today at 1.0388, which is still above the early 2017 low at 1.0339. A move below this level, MMXVII, would take the price to its lowest level since 2002, prompting traders to talk about parity as the next major target.
The 38.2% retracement of the downside move from yesterday's high is at 1.0460, which is about 10 points away from the April 28 low at 1.04709. Of course, the price broke below and outside the up and down range at that point. A return to the "red box" would be a disappointment for sellers and could lead to sellers rejoining buyers after the failed breakout.