Trade Idea: EURUSD

The euro has been declining in an almost straight line against most of the major currencies thanks to market sentiment poised to expect even looser monetary policy measures from the ECB when they reconvene in December. Our focus today is on the EURUSD.

The U.S. dollar has finally broken out of a 8-month long consolidative correction after last week's October NFP report. A mixture of both macro and technical factors has sent the greenback soaring against most of the majors. This has been most pronounced against the euro.

Diverging paths of monetary policy by the two central banks has forced the EURUSD below the critical 1.1000 technical and psychological level. EURUSD now trades at a 1.06 handle.

The pair has broken key support that has held for the 4 attacks since May 2015. We intend to sell rallies into our "key selling zone", expecting former support to now hold as resistance.

Our technical trade idea for EURUSD

Our technical trade idea for EURUSD

Weak rallies should get pounded with offers, offering bears a chance to get short with good risk-to-reward potential. So far since Monday's open, EURUSD has yet to provide bears a decent pullback. This shows that the sellers are firmly in control.

We are eyeing the 1.05 big figure and possibly even the 1.04 handle as our "primary target". If the current bear trend holds, it should be reasonable to expect price to stage an attack of the 1.02 figure before Christmas.

We are bearish for the medium, and long term. Our short term bias is currently neutral. A daily close above our "key selling zone" will negate our bearish bias.