EUR/USD clocked a low of 1.1835 a few minutes before press time. That was the lowest level in four months.
The 14-day Relative Strength Index (RSI) has dropped below 30, indicating oversold conditions for the first since February 2020.
However, the indicator needs validation from the price chart, which is currently showing no signs of bear fatigue. Two of the four red candles created over the past four trading days have little or no wicks. It indicates the sellers are in control.
Also, the downward momentum looks strong with the 5- and 10-day Simple Moving Averages (SMA) trending south.
The pair appears set to test the 200-day SMA, currently at 1.1816. A violation there would expose 1.1695, which is the 38.2% Fibonacci retracement of the rally from 1.0636 to 1.2349.
The hourly chart shows a bullish divergence of the RSI. As such, a minor bounce may be seen before a drop to the 200-day SMA.
Daily chart
Trend: Bearish
Technical levels
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