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The Euro slumped to the lowest level in a month against the US Dollar, breaking trend line support and hinting a double top is set below 1.40. Sellers are aiming to challenge the 50% Fibonacci retracement at 1.3734, with a break below that exposing the 1.3673-81 area marked by the 61.8% level and the bottom of a Rising Wedge formation. Alternatively, a reversal above the 1.3795-1.3810 region (38.2% Fib, trend line), targets the double top at 1.3932. Prices are too close to support to justify entering short in line with our long-term fundamental outlook from a risk/reward perspective. We will remain flat for now, waiting for a short trade setup to emerge.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com