There is no mercy for EUR/USD. After the one-two punch from the ECB, the pair dipped below 1.30 but bounced. Only temporarily.
Yet after the dust from the US ISM release settled, the pair continued lower. After hesitating at the first support line, this is gone as well and the pair now at a multi-year uptrend support line.
The ECB cut interest rates and announced an ABS/QE program coming in October. Draghi more than delivered on his expectations and certainly did “whatever it takes”, if to paraphrase his own words from 2012.
In the US, the ISM Non-Manufacturing PMI reached the highest in 9 years. The good outcome, but more importantly, the lack of distraction, sent the pair lower.
1.2955 was support in the past and it held the pair back. However, at the time of writing, the pair is below this line and is now touching a multi-year uptrend support line.
The line begins in November 2012, at the low of 1.2660. It was then touched twice during 2013, and then the pair took off and the line was abandoned.
This move sends it back down. The chart shows it all:
The low so far is 1.2919, a fall of over 200 pips in one day. The high of the day is 1.3153. That is a range of over 230 pips in one day, something we haven’t seen for a very long time.
Further support for EUR/USD appears at 1.2840, which was strong support, 1.28 which is a round number and strong support at 1.2750, which was a double bottom.
Resistance is now at the previous support line of 1.2955, followed by the round number of 1.30.
Where will this fall stop? There is a big event tomorrow: Non-Farm Payrolls.