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EUR/USD Pulling Back; Resistance at 1.2670

EUR/USD is in a bearish market. I don't  think anyone will debate that. However, where it will find support or start to consolidate is up in the air. This week, the pair broke lower, finding support finally at 1.2570. It has since pulled back, but since the market is bearish, we should expect sellers on this rally. When we look at the 1H chart, we can see that the 1.2665-1.2680 area represents the support for the brief 1-session consolidation on Monday. This might provide resistance long with the 50-hour SMA which held as resistance on Monday.

(EUR/USD 1H Chart 9/30)

Now, we might not see such a strong dip ahead of the ECB meeting on Thursday especially after what looks like an anticipatory dip already. If the ECB continues to be dovish, and either implements QE or gives the impression that it is seriously considering it, the EUR/USD still has room to fall. The 1.2460 level for example is the 78.6% retracement of the 2012-2014 rally. With the weekly RSI in oversold territory, price should find support here unless the ECB implements QE.