EUR/USD traded lower on Tuesday, breaking below the key support zone of 1.1258, which had been acting as the lower end of the range the pair was trading within since November 26th. In the bigger picture, the pair continues to trade below the downside resistance line taken from the high of May 25th, and thus, we see decent chances for the pair to continue drifting south for a while more.
We believe that the dip below 1.1258 may have opened the way towards the low of November 24th, at 1.1185. The bears may decide to take a break after challenging that zone, thereby allowing a corrective bounce. However, we expect them to reclaim control near the 1.1258 zone, and perhaps push the action back below the 1.1185 zone. This will take the rate into territories last seen in the summer of 2020. The next support may be at 1.1100, marked by the low of June 1st, 2020.
Turning our gaze to the short-term oscillators, we see that the RSI hit resistance at 50 and turned down, while the MACD stands below both its zero and trigger lines. Both indicators detect downside speed and add to the case of further declines in this exchange rate.
On the upside, a break above the 1.1375 zone, which was the upper bound of the aforementioned range, could signal a decent correction higher, but not a trend reversal, as the rate would still be trading below the downside line taken from the high of May 25th. The bulls could push the action towards the 1.1432 barrier, marked by the inside swing low of November 12th, or the peak of November 15th, at 1.1465. Another break, above 1.1465, could allow a test at the pre-discussed downside line, or the 1.1524 barrier, which acted as a temporary floor between October 6th and November 5th.
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