EUR/USD Turned To The Downside As USDX Edges Higher!

EUR/USD is into a corrective phase in the short term after the failure to stabilize above near-term dynamic resistance. The pair is traded at 1.1213 level, the aggressive breakdown through the 1.1240 static support has signaled a further decline in the upcoming days.

The price has increased a little today, but this rebound could be only a temporary one, EUR/USD could test and retest some of the broken downside obstacles before it will resume its bearish movement.

The US Unemployment Claims have disappointed yesterday, the indicator was reported at 1508K in the previous week, worse versus the 1300K estimate, the USD has received support only from the CB Leading Index which has increased by 2.8%, beating the 2.4% estimates, and by the Philly Fed Manufacturing Index, the economic indicator was reported at 27.5 points, compared to -23.0 consensus.

Today, the EU Economic Summit could bring more volatility into the markets, you should keep an eye also on the Euro-zone and US Current Account data.

The US dollar rallies in the short term as the USDX has managed to climb higher, the index is traded right above the S1 (97.36) level, so a further increase will push EUR/USD lower. A valid breakout above the S (97.36) will signal an increase towards the upper median line (UML) of the descending pitchfork.

Ive said in my previous analysis that the US Dollar Index could approach and reach the upper median line (UML) after the failure to approach and reach the median line (ML) and after the rate has developed a bullish engulfing pattern right on the 96.00 psychological level.

EUR/USD has finally managed to break below the R1 (1.1243) level, support has turned into resistance, and below the 1.1240 static support. The price could extend the sell-off if it stays below the broken downside levels.

Technically, the current drop is natural after the false breakouts above the upper median line (UML) of the descending pitchfork, the next major downside target is seen at the median line (ML). Still, it is hard to believe that well have such a sharp drop in the short term, EUR/USD could come back higher before it will resume the downwards movement.

EUR/USD is bearish as long as it is traded below the upper median line (UML) of the major descending pitchfork, any potential rebound could give us another chance to go short on this pair.

The pair have confirmed the minor Head&Shoulders pattern, so a drop towards the PP (1.1005), 1.1, and towards the 61.8% level is favored in the short term. I believe that only a valid breakout above the upper median line (UML) of the descending pitchfork will invalidate a further downside movement.

The 38.2% level and 50% retracement obstacle could be used as near-term targets, while the 1.1240 is seen as resistance. A 1.1240 level retest or a false breakout with great separation will bring another selling opportunity on the H4 chart. EUR/USD will approach the mentioned downside targets if the US Dollar Index will continue to increase.

Olimpiu Tuns

Olimpiu Tuns is a seasoned market analyst / trader / trainer on the financial markets with expertise in forex, cryptocurrencies, commodities, futures, options, index, CFD for more than 8 years. He is also a famous blogger in both technical and fundamental analysis, trading signals, trade setups, etc.

He has worked as a Market Analyst / Consultant for three major Brokerage companies, Admiral Markets, MultiBank Exchange Group and InstaForex (live webinars, market analysis, educational materials, video analysis, video tutorials, ghostwriting, content creator), as a Social Media Manager and as a Financial Markets & Crypto Analyst / Contributor for very important news portals/blogs (investing.com, benzinga.com, forexalchemy.com actionforex.com, countingpips.com), websites, educational platforms (Forex.Academy, Forex.Today), independent clients, etc.

Olimpiu Tuns currently works as a Financial Markets & Crypto Analyst / Signal Provider / Trader / Trainer.

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