Oct 8 (Reuters) - The fragile EUR/USD could see a much bigger slump next week, if there is a second weekly close on Friday below a broken retracement level.

EUR/USD is at risk of a deeper slide through the 1.1104 level, a 50% retracement of the 1.0125 to 1.2084 (2025 to 2026) EBS rise, in part due to last week's bearish close below the 1.1336 Fibonacci level, a 38.2% retracement of the same 1.0125 to 1.2084 gain.

The downside bias is being reinforced by the 14-week momentum reading, which has been negative for three weeks straight.

The US dollar bullish cycle is intact and could extend its gains, which would exert downward pressure on EUR/USD.

Note the dollar held near its strongest level in 18 months on Thursday, after hawkish minutes from the US Federal Open Market Committee signalled policymakers viewed inflation as the biggest risk to their outlook.
Weekly Chart

(Martin Miller is a Reuters market analyst. The views expressed are his own)