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EUR/USD: Revisits daily lows, Double bottom?

FXStreet (Mumbai) - The EUR/USD pair surprised markets today by trading weak despite sharp losses in the European equity markets. The pair has moved back to trade closer to its session low of 1.1155 levels.

Weak stocks ignored

The common currency was one of the top performers in the recent bout of risk aversion witnessed in August. The sharp losses in Europe and US led to strength in the EUR; a funding currency used to fund risk-on carry trades.

However, the ECB’s renewed dovish stance in September meeting could be hurting the EUR due to which the currency has failed to strengthen amid risk aversion in equities.

The pair is finding support around 1.1155 levels, raising the possibility of the double bottom formation on the intraday technical charts. Given the weakness in the stocks and the drop in the Treasury yields, the currency pair could very well tick higher. However, it remains to be seen if the spot manages to do so given ECB President Draghi could hint at more QE tomorrow in his speech.

EUR/USD Technical Levels

The immediate resistance is seen at its 200-DMA located at 1.1211, above which the spot could target 1.13 levels. On the downside, support is seen at 1.1126 (50-DMA) and 1.1017 (Aug 18 low).

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