EUR/USD: Correction Underway?

Dollar pulls back after soft data

EUR/USD entered into bearish territory a couple of months ago and after a strong run for the dollar, the pair finally found support around 1.17, where it bottomed at the end of March.

The UoM consumer sentiment survey fell to its lowest in a decade on Friday which appeared to encourage further profit taking in the greenback and, while it has pared losses a little Monday, there could be further to run.

EUR/USD Daily & 4-Hr Charts

The first obstacle to the upside lies around 1.18—the 50% retracement of the move from 30 July highs to 11 August lows—(see 4-hour chart), which coincides with a cluster of moving averages.

A move above the 61.8 fib may signal that the correction has further to run with the next test coming around 1.19-1.1920, which coincides with the 30 July highs and 38.2 fib—May highs to August lows on daily chart .

A move above here will make things very interesting, with 1.20 falling around the 50 fib and moving average cluster on the daily chart .

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