EUR/USD heads towards a test of the 1.1600 handle
Whatever optimism on the inflation rhetoric that came with Germany's positive CPI readings yesterday was all blown away after the Eurozone core inflation reading disappointed and fell back below 1.0% in the report earlier here.
EUR/USD now falls to a low of 1.1605 on the day as softer inflation figures is adding to the misery suffered by the single currency as a result of Italian budget worries since yesterday.
How quickly the tides have changed for EUR/USD. Coming into this week ahead of the FOMC meeting, everything looks to be working out well as price continues to knock on the door of the 1.1800 handle. But as we look to close out the week now, it looks to be a battle for bulls to stay alive as price takes out one key technical level after another.
The two key hourly moving averages were the first to give way, then the 1.1700 was broken and subsequently the 100-day MA also was taken out. The upwards trendline that encompassed the move higher since August also broke and now it looks like both the 100 and 200-bar MAs on the 4-hourly chart look set to crumble as well as the 1.1600 handle.
That is quite a number of levels to be taken out in just the span of under 48 hours.
Right now, bias in the pair remains more bearish and should the 1.1600 handle give way then the major question will be can the 1.1500 handle hold? There are minor support levels in between but given the technical breaks we have seen it's hard to argue a case for a rise in the euro at this juncture - there's not even a case fundamentally as well.
