Shallow Retracement or Breakdown on EUR/USD (April 24, 2013)

EUR/USD is currently testing the 1.3000 major psychological area, as the path of least resistance is downwards. After all, fundamentals in the euro zone remain very weak as the region grapples with several financial and economic challenges.

Today’s release of the German Ifo business climate report could provide a catalyst for a stronger move down as a lower figure is expected.

The pair could still retrace to the 38.2% Fibonacci retracement level in line with a former support area. With all the negative factors weighing on the euro, a shallow retracement or a sharp breakdown could be likely.

If the pair eventually drops below the 1.3000 handle, a stronger downward trend could ensue and the next support level on the longer-term time frame is around the 1.2750 mark.

By Kate Curtis from Trader’s Way