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Euro taking the next leg lower

The single currency had a fairly good run last week and managed to regain some ground against the greenback.

Euro
Source: Bloomberg

It hasn’t taken long for the weakness to resume and it now seems EUR/USD is ready for another round of weakness. The pair hovered around $1.1000 for a period but this has now proved unsustainable with sellers increasingly gaining confidence to sell down the euro.

This week has seen EUR/USD lose its grip on $1.1000, resulting in the pair testing an uptrend support which had been in place since the 15 March lows and came in at around $1.0800. With this short-term uptrend line broken, there is potential we could see a move back towards March lows.

There is some support at $1.0700 but, given the build-up in momentum, I don’t think this level will hold. Traders could actually consider adding to positions on a break below $1.0700. On the economic front we had disappointing retail sales and the Greek situation remains an ongoing saga. The fundamentals will likely contribute to keeping the euro on the back foot in the near term.

EUR/USD
Click to enlarge

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