EUR/USD has fallen in a 3-wave move from 1.4940 to 1.3830 and is currently retracing. If this down trend is to remain a force then major technical resistance levels should hold firm. We have a daily high, a 61.8% retracement level, plus 3 important moving averages all converging on the same area; 1.4290/1.4300. Bears will find excellent risk-reward by selling into this resistance with fairly tight stops above 1.4370 looking for a move towards 1.3700. Bulls can consider buying a break of this level as momentum is bound to increase above there.
From a fundamental perspective, we need to look at the two big gab fests. If the US debt ceiling gets signed off on and the EZ talks go nowhere, then EUR/USD will fall heavily. On the other side, a successful conclusion to the EZ meetings and more delays in the US will probably see EUR/USD break above the resistance I mentioned above. If both sets of talks have similar outcomes, ie both fail or both succeed, then EUR/USD will probably continue to range trade.
