The European currency is falling significantly against the US dollar after quite favorable US macroeconomic statistics were released and a number of officials made their statements, in particular, the Fed's Dennis Lockhart.
US Factory Orders, published yesterday, grew by 1.8% in June from -1.1% earlier. This increase strengthened the American currency despite the weak Manufacturing PMI statistics.
The US dollar got extra support when Dennis Lockhart announced that a rate increase is approaching; and September could be "appropriate time".
Support and resistance
Bollinger Bands on the daily chart are still horizontal, indicating flat dynamics in the medium term. However, the price is approaching the lower MA, thus, a correctional growth is possible.
MACD resumes its downward trend with a relatively strong sell signal (the histogram is below the signal line). The indicator recommends short positions.
Stochastic is approaching the zero mark, indicating that the euro is oversold. A correctional growth is possible at the end of next week.
Support levels: 1.0865 (the pair is testing this mark), 1.0808 (20July local low), 1.0784 (24 April low), 1.0700.
Resistance levels: 1.0900-1.0914 (the nearest marks, used to be strong support levels), 1.0970, 1.1000 (strong psychological level), 1.1035, 1.1100, 1.1129 (27 July local high), 1.1150.
Open long positions when the pair rebounds near the current support levels (1.0865, for example) and if technical indicators give appropriate signals. Take-profit should be set at 1.0970-1.1000 and stop-loss at 1.0800.
After the strong breakdown of 1.0865 or 1.0808 would the pair is likely o reach new lows at 1.0700. Stop-loss should be set no further than 1.0970-1.0900.