EUR/USD Corrects Lower And Breaks Support Testing Key Level On Rebound

The EURUSD has marched lower as well today as the dollar selling ceases with the news out of China on the dollar acceptance as a reserve currency and partner.

The pair has moved back below the 50% retracement level which was broken yesterday. This is the midpoint of the longer term move down from the July 2008 high of 1.6037 to the Ocotber low of 1.2329. The level comes in at 1.4183.   The low reached 1.4153 and has corrected back up toward the level. Watch this level. If it holds the correction, the downside move can continue.

A move back above the 1.4183 should see further covering that could take the pair toward 1.4212.  The 100 bar moving average on the 5 minute chart is at 1.4250 currently. This ultimately would be the stop on the upside.  The pair moved below the 100 bar moving average at the 1.4297 giving the pair the go ahead to start the correction earlier today (see chart below).

A break lower will look to target the 100 hour moving average at the 1.4137 level. THIS IS A KEY level and will likely lead to some profit taking buying against the level. A move below will likely lead to lower levels. The 38.2% retracement of the last move higher in the EURUSD also comes in at 1.4129 which gives two reasons to find support against this level.

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