EUR/USD confirmed our daily scenario yesterday dropping as low as 1.3562 (“We expect the pair to continue trading lower today, with the initial target at 1.3571 and 1.3554 in case of a successful break”).
Today the pair broke below its support level by 1.3554 and looks set to extend its decline lower. From here, a move to test the next line of support by 1.3525 is not excluded, but the stochastic oscillator is deeply oversold on the 1-hour time-frame which may give scope for a possible pullback. However our bias remains to the downside in the near-term, especially since the pair broke below an oblique trend line off the lows of June and July, which suggests further downside potential. Any pullbacks should be well capped by 1.3554 and 1.3571.