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The EUR/USD pair prolonged its recent bearish trajectory and dropped to a near five-month low, around the 1.1700 level during the Asian session on Wednesday. As FXStreet’s Haresh Menghani notes, there are no signs of bearish exhaustion despite oversold conditions.

Key quotes

“The US economic docket features the release of ADP report on private-sector employment, Chicago PMI and Pending Home Sales data. This, along with the US bond yields and the broader market risk sentiment, will influence the USD price dynamics and provide some impetus. That said, the continuous widening of the gap in the US and European COVID-19 response should act as a headwind for the major and cap any attempted recovery move.”

“RSI (14) has moved on the verge of breaking into oversold territory and warrants some caution for aggressive bearish traders. This makes it prudent to wait for some near-term consolidation or a modest bounce before positioning for any further depreciating move.”

“The path of least resistance for the pair remains to the downside. Hence, any meaningful bounce might still be seen as a selling opportunity and remain capped near the mentioned confluence support breakpoint, around the 1.1760 zone.”

“Some follow-through selling below the 1.1700 mark now seems to accelerate the fall further towards the 61.8% Fibo. level, around the 1.1620-15 region. This is closely followed by the 1.1600 mark, which if broken should pave the way for the continuation of the ongoing bearish trend.”