At the end of yesterday's trading session, the euro fell by 53 pips. During today's Pacific session, the price has already dropped another 30 pips, approaching the target level of 1.1605. The Marlin oscillator is also declining after rebounding from the zero line. Even on the weekly chart, divergences are present and Marlin remains in negative territory.

Formally, the price action is developing in line with our primary scenario, under which the euro is expected to continue its long-term decline toward the key target at 1.1066 — the May low — which nearly coincides with the 50% Fibonacci retracement of the rally that began in January this year.

However, this otherwise clean technical outlook is being clouded by several factors: the weekly gap from Monday remains unfilled, U.S. stock markets are near all-time highs, the yield on 5-year U.S. Treasury bonds is stable at Friday's closing level, and daily trading volume remains below average. In other words, there is no obvious capital flight — the euro is falling because of internal factors, possibly due to the recent resignation of French Prime Minister Sebastien Lecornu.

If early parliamentary elections in France are announced, this could further destabilize the euro's outlook.

For these reasons, we are not counting on a deep decline in the euro. A price reversal from the 1.1605 level is possible — and could happen as soon as today. Should the price consolidate below that level, it may then work its way down to the next support at 1.1495. If that level also breaks, the path opens toward 1.1392.

A reversal may occur from any of these key levels, possibly leading the price back up to 1.1779 to fill the unclosed gap — a last opportunity to retest the upper boundary of the price channel around 1.1910. The euro is entering a chaotic phase resembling that of the first half of 2021.

On the four-hour chart, the price is rapidly approaching the support at 1.1605. The Marlin oscillator is declining along a steep trajectory and, if this pace is maintained, it will end up in the oversold zone around 1.1495.

Therefore, if the price does not reverse for a correction of the entire decline since September 17, we expect that reversal to occur from the 1.1495 level.