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The Euro is making cautious headway downward against the US Dollar as expected after showing a Shooting Star candlestick below resistance in the 1.3892-1.3911 area, marked by the December 27 high and the 38.2% Fibonacci expansion. Support is in the 1.3800-31 region, a former double top, with a drop back through that eyeing a rising channel bottom at 1.3765. Alternatively a break above resistance targets the channel top at 1.3939
Our long-term fundamental outlook favors losses but risk/reward considerations argue against entering short for now. We will wait for confirmation on a daily close below the channel bottom to initiate the trade.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com