Looking at the EURUSD, we note that as a result of drops lasting last week, the price overcome extremely important support around 1.1280. This fact meant that the euro (EUR) is currently the weakest against the US dollar (USD) from June 2017.
Considering that – from a technical point of view – overcoming one technical support should open the way to further declines in the vicinity of another important zone, it is possible that the depreciation will continue. If in the near future there will not be a strong demand reaction, which could negate yesterday’s breakout, we would expect to re-test the area around 1.1120 or even 1.0860.
It should also take into account the existence of the principle of changing poles, which says that each significant level of support, after defeating, should be tested from the other side (as resistance). Unfortunately, however, this rule does not specify the time that should elapse from rebound to re-test. It is possible, therefore, that a small correction will appear now or only after one of the two support levels mentioned above is rejected.
