EUR/USD Approaching 61.8% Fibonacci Retracement Level

EUR/USD (daily chart as of September 23, 2014) has continued the strong downside momentum since it reached the high of 1.3990 on May 8th. The pair is now trading below the 20-day EMA, which has been acting as short-term resistance since early July.

On the weekly chart, current price is approaching the 61.8% Fibonacci retracement level from the high of 1.3990 (May 8^th, 2014) to the low of 1.2040 (July 24^th, 2012), which is around 1.2785. It is also close to the support level around 1.2750, the low in 2013.

If the pair can hold 1.2800/2750, a short-term rebound may be expected. In the event that it breaks down below 1.2800/2750, further downside should follow.

Euro-zone manufacturing and services data earlier today showed the economy slowed to the weakest pace this year, adding more pressure on the ECB for further stimulus to restore growth. The Markit Manufacturing PMI fell to 50.5 from 50.7 in August.

Support levels below:

1st support: 1.2815/00 (September 22 low / psychology level)

2nd support: 1.2785/50 (61.8% Fibonacci retracement level / 2013 low)

3rd support: 1.2650 (November 13, 2012)

Resistance levels above:

1st resistance: 1.2995 (September 16 high)

2nd resistance: 1.3160 (September 3 high)

3rd resistance: 1.3300 (August 22 high)