The EURUSD has experienced a notable decline after breaking below a key support zone on the 4-hour chart. This zone consisted of the 200-bar moving average and a swing area between 1.12657 and 1.1273.

This breakdown has provided sellers with a technical indicator to pursue further downward movement. The next target for sellers is the 38.2% retracement of the January–April rally, positioned at 1.10395.

Bearing Down On Support Levels

A fall below 1.10395 could intensify the downward trend. The key to maintaining this bearish momentum is for the price to stay below the previously breached support area and the 200-bar moving average.

Remaining under this level supports the current bearish sentiment in the short term. The control remains with the sellers as long as this price action persists.

We’ve just seen a firm move in the EURUSD, following a clean break through a well-watched support patch on the 4-hour timeframe. This zone wasn’t just any area on the chart—it combined both the 200-bar moving average and a prior consolidation region marked between 1.12657 and 1.1273. That sort of dual-level confluence tends to attract interest from both sides of the market, serving as a staging ground for decisions.

Now that price action has settled beneath it, the technical tone has shifted. When several candles begin closing clearly below such a level, it allows one side—here, the sellers—to anchor their conviction. In this instance, the sustained drop confirms that this breakdown wasn’t merely a temporary dip or stop-hunt. Longer wicks followed by strong-bodied sessions suggest that any attempts to return above were met with rejection.

As the downside structure firms up, attention naturally turns to the next measured level. In this case, that would be the 38.2% Fibonacci retracement of the broader rally that began back in January. It sits at 1.10395, and it’s not just a number to look at—it reflects a retracement from an earlier momentum leg, giving us a gauge of how far the price might reasonably fall before traders begin questioning the strength of the prior move.

Trader Action Plan

The pace of the drop this week has not been erratic, but it has been methodical. Sellers appear in control for now, and their bias is supported as long as the price remains under that broken support and below the smoothed curve of the 200-bar line. Consistent resistance at these marks adds to the downward tilt we’re witnessing.

We should be remembering that momentum can feed on itself when aligned with such structure. The fact that we’re seeing this extension pattern means there’s no reason yet to anticipate a reversal unless proven wrong by a move back above the prior failure zone. If that doesn’t happen, there’s room for the pair to drip further, potentially accelerating if bids thin out below 1.1040.

Traders have to be reactive but precise. Targets don’t need to be vague or wishful. As long as price fails to hold above the broken markers, there isn’t a coherent reason to bet against the momentum already in play. Let the levels define our participation and not the other way around.

If we zoom out, we’re finding that this recent decline hasn’t yet reversed any longer-term bullish bias. But in the short to medium term, the evidence is stacking up in favour of the directional push downward. What follows over the coming sessions will likely depend on how cleanly price engages with retracement levels and whether there’s enough conviction below. Any hesitation there could trigger short covering, especially if price hesitates or consolidates just above those retracement points.

For now, the bias remains in one direction, and everything visible on the chart supports that profile. We remain attentive to how swiftly price approaches and responds to the next level—it’s not about blind anticipation, but observing price behaviour in context.

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