The Euro is trading sharply lower against the U.S. Dollar on Monday. The selling is being driven by concerns over Brexit and simmering tensions between the European Union (EU) and the Italian government.
According to the Sunday Times, four British ministers who back remaining in the European Union are on the verge of quitting Theresa May’s government over Brexit, adding to the political uncertainty. Investor confidence is also weakening due to the standoff over Italy’s budget. Last month, the EU rejected Italy’s 2019 budget. Last week, the EU cut its forecasts for Italian growth.
Daily Technical Analysis
The main trend is down according to the daily swing chart. Today’s break through 1.1301 reaffirmed the downtrend, putting the EUR/USD in a position to challenge lows not seen in 16-months. The new resistance is the old bottom at 1.1301.
The next major target is a long-term Fibonacci level at 1.1185.
Daily Technical Forecast
Based on the early price action, the direction of the EUR/USD the rest of the session is likely to be determined by trader reaction to the steep downtrending Gann angle at 1.1261.
Holding above 1.1261 will not indicate a bottom has been reached, it will only indicate the selling pressure is slowing. If this generates enough upside momentum, we could see a test of 1.1301.
Crossing to the weak side of the angle at 1.1261 will put the EUR/USD in an extremely bearish position. This angle is moving down 0.0080 per day from the 1.1501 main top. If the Forex pair continues to follow this angle down then we could see a test of 1.1185 as early as Tuesday.
If the EUR/USD drifts sideways into the next downtrending angle at 1.1381 today, moving down at a rate of 0.0040, then look for a test of 1.1185 on November 19.
This article was originally posted on FX Empire
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