By CountingPips.com
The European common currency fell for a second straight day against the US dollar and touched the lowest exchange rate since the beginning of June. The EUR/USD declined to trade briefly below the 1.3000 major support level in Wednesday’s trading before pulling back to trade slightly over 1.3000. This is the lowest level for the EUR/USD since June 3rd when the currency pair was on its way heading higher and away from the 1.3000 level.
The US Federal Reserve meeting last week took most of the air out of this currency pair as the Fed outlined the possible pullback of its quantitative easing program which has boosted US dollar sentiment. The EUR/USD had gained for four consecutive weeks before last week’s decline and now the EUR/USD pair is at a major crossroads at the 1.3000 level.
Notable Levels to Watch:
The most important key level to watch is the current 1.3000 price and whether prices can stay above or fall below this level. In 2013 so far, we have seen consolidation around this level many times followed by a breakout above with prices accelerating into the 1.3200 resistance area or a breakout below and prices accelerating to the 1.2850 — 1.2800 support area. Will we follow that same type of path again(?), we can only wait and see.
In the short-term, if we can stay above the 1.3000 then bullish momentum will likely see a run into 1.3050 — 1.3075 resistance followed by more resistance at 1.3100 and eventual heavy resistance at 1.3200.
Further downward movement should see support at the 1.2950 area before the 1.2850 key support comes into play. If this pair breaks below 1.2800, we will likely challenge the lowest levels of the year near 1.2750 that were reached in early April.
Written by Zac Storella, CountingPips Forex Blog
