EURUSD has been on a steady downtrend, barely showing any signs of a pullback until recently.

Price bounced off the lows at 1.0615 and may be ready for a retracement to the Fibonacci retracement levels based on the latest swing high and low on the 1-hour time frame.

In particular, the 38.2% retracement level lines up with a broken support area at the 1.0700 major psychological mark. It is also near the 100 SMA, which might hold as a dynamic resistance level. A higher pullback could last until the 50% Fib, which is closer to the long-term 200 SMA.

Speaking of moving averages, the 100 SMA is below the 200 SMA so it’s safe to assume that the path of least resistance is to the downside. If any of the Fib levels allow the selloff to resume, EURUSD could make its way down to the previous lows or much lower.

Stochastic is on the move up, with a small bullish divergence, so buyers might still be in control for now. RSI is also pointing north, confirming that sellers are taking a break.

Earlier today, the FOMC minutes showed that most policymakers have taken a hawkish stance, supporting the idea of a Fed liftoff in their December meeting. Some even voted to hike interest rates during their October statement but others pointed out that the economy is not ready yet.

Meanwhile, ongoing raids in the euro zone to prevent further terror attacks are weighing on the shared currency. There were no reports released from the region yesterday, as market uncertainty continues to weigh on the euro.

By Kate Curtis from Trader’s Way