EUR/USD to continue to fall

The EUR/USD has already seen a significant decline in recent weeks, from an intra-day high on May 4 of 1.4940 to a low of 1.4172 on May 11; the question that many traders are asking is "Can it go lower?"


Technically speaking it is looks like it can.  Based on the prior trend channel the target is right around 1.3900.  This will leave the primary uptrend still intact (lime line), but the more aggresive uptrend line (red), which began in January, has already been broken.  This will act as resistance on corrections higher in the EUR.  Expect resistance by 1.4500, with a move above 1.4500 indicating a false downside breakout, and likely continued upward stregnth.

At this time though caution is warranted on the long side as there is definite room for further weakness into the 1.400-1.3800 region, with the midpoint of that range, 1.3900, being the target.  This corresponds with a 50% retracement of the move beginning in January.  A decline below 1.3800 signals a move further to the downside, with a target of 1.3650.