The EUR/USD has been in a short term bull move from the lows at 1.1074 in the beginning of August. This is mainly due to a weakness in the US Dollar. This currency pair has hit its secondary bull targets at around the 1.1358 level or the 161.8% of the first leg of the bull move. This zone is also the 61.8% of the 1.1637 – 1.0909 move to the downside. Massive supply is being found and price has tested it twice already.
Right now bulls are recharging at previous lows and the 50% of the last leg up still inside the bull structure for a retest of this supply area. Should this area break we could look at 1.1430 and above for bull targets.
It all depends on the USDollar. Here´s a chart of the Dollar Index Futures contracts. It´s easy to spot the immediate trend: we´ve been very bearish but price has hit some major levels. Not only this zone is supported by an ascending support but also by massive demand around the 94.16 – 94.35 level which are also short targets at the 150% – 161.8%.
So basically we need direction on the USDollar to see where the EUR/USD is headed. Dollar bears would make the currency pair to test for a third time the 1.1358 level. If in fact bulls pick up the USDollar and the $DXY breaks with the bull – bear zone at 94.99 we could see the EUR/USD breaking with the bull structure and test previous levels of support.
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