EUR/USD: Sellers in full control, all eyes on 1.13 support

Cycles & Levels: The weekly candle printed is an ugly one that appears set to at the bare minimum test the key support at 1.13. Also, it’s the second consecutive rejection off the 50% fib retracement from the 2017 rally. If the price breaks down 1.13, we are looking at a potential target of 1.0863, which will meet the next weekly support. On the daily, I am looking at two targets if a downside resolution occurs. For the developing down-cycle to match its previous one, we require an extension to at least 1.1182 ahead of the 100% fib projection target of 1.1129 as marked by the black rectangle in the chart. The hourly chart, meanwhile, has reverted back to a down-cycle, which makes any intraday rebound into hourly resistance areas potential sell-side opportunities.

Correlations & Volumes: There is all the justification in the world for this market to continue heading lower based on the German vs US yield spread. The recent decline in the pricing of the pair also comes amid a lower German vs Italian yield spread, which is always going to represent an extra weight to the Euro. Last Friday’s tick volume was a touch milder but since it wasn’t interacting with a key daily level, the significance is far from being that relevant.The latest POC can be found at 1.1343, above the price close, which further reinforces the view of sellers being in control short-term.