For over a month, the euro/dollar exchange rate has followed this pattern: whenever the pair tries to rally, sellers seem to be lurking nearby, pushing it back down. With another drop this week, one has to wonder: at this rate, how long can buyers hold onto the bottom? The daily chart paints a rather bleak picture for buyers. Since peaking just above 1.1700 in August, EUR/USD has been in a near one-way downtrend, freefalling to lows near 1.1100 in October. More importantly, any recent attempts to rally have repeatedly stalled near the 23.6% Fibonacci retracement level of this decline—1.1254. This essentially reflects market sentiment: sellers are reluctant to concede this ground. After being pushed back down again yesterday, the price has now fallen back to around 1.1150. This brings the 1.1100 level back into focus – after yesterday's higher-than-expected US CPI data and the strong rebound of the US dollar, 1.1100 looks quite likely to be tested downwards. The weekly chart clearly illustrates why 1.1100 is a crucial level to watch. The 200-week moving average is nearby, around 1.1109, which, along with the 50.0% Fibonacci retracement level of 1.1129, forms a key defensive line for buyers. A clear break below this support area would be a rather ominous sign, potentially opening the way for a further decline towards 1.1000, or even the 61.8% Fibonacci retracement level of 1.0905. That said, can the euro stage a dramatic comeback? Well, I think the odds aren't in the euro's favor. Yesterday's US inflation data reinforced market expectations that the Federal Reserve will have to maintain a more hawkish stance, and the debate over whether to raise rates again in December has largely subsided. As for Europe, weakening growth momentum, coupled with fiscal risks from France, complicates the situation for the European Central Bank as it enters next year, making it more difficult to take more aggressive measures. Furthermore, with the Federal Reserve's policy rate still significantly higher than the European Central Bank's, higher US yields will make the dollar more attractive, making it harder for the euro/dollar to mount a convincing rebound. However, there might be a small counter-argument that could help the euro: positioning. According to the latest CFTC data, as of last week, euro short bets were already quite crowded. Therefore, further declines in energy prices and/or improvements in European fiscal sentiment could trigger a short squeeze – even without any dramatic improvement in the euro's fundamentals. So, this is something to keep in mind. Looking ahead to next week, Friday's US PPI data is worth watching, followed by US retail sales and the Fed meeting minutes next week. Returning to the chart, buyers first need to manage to regain 1.1200 to initially regain some control. However, to truly make the rebound more credible, a break above 1.1254 is necessary. Until then, sellers will still have the upper hand in the overall picture. And if 1.1100 is ultimately breached, things will first get worse for the euro before they can possibly improve.