Is The USD Rebound Finished?

The USD has decreased aggressively versus its rivals in yesterdays session and it seems like that the short term rebound is finished and that the greenback will decline further. Still, it is premature to say if the dollar will depreciate in the upcoming period, the Euro-zone and the US data will drive the markets today.

EUR/USD is traded at 1.1260 level, right above the 1.1240 static resistance, but this could still be a false breakout if the Euro-zone data will disappoint later. The French Flash Services PMI could increase from 31.1 points to 44.9, while the French Flash Manufacturing PMI is expected to jump from 40.6 points to 46.1 points in June.

You should keep an eye on the economic calendar today as the fundamentals will shake the markets, the German Flash Manufacturing PMI is expected to increase from 36.6 to 41.5 points in June, the Flash Services indicator could register significant growth as well, from 32.6 to 41.7, better than expected data could support the EUR which it could appreciate further versus the USD.

The Euro-zone Flash Manufacturing PMI and the Flash Services PMI indicators are expected to increase as well in June, the USD could be saved only by poor Euro-zone figures and by good US data today.

The US is to release the Flash Manufacturing PMI as well, the indicator could increase from 39.8 to 50.0 points, the specialists expect the Flash Services PMI to increase from 37.5 to 46.9 points, while the New Home Sales indicator could increase to 637K in May.

The Dollar has slipped lower as the USDX has plunged in yesterdays session, the index is traded at 97.10 after the failure to stabilize above the S1 (97.36) level. USDX could jump higher if the Euro-zone economic numbers will disappoint later today and if the US data will come in as expected or better.

A USDX‘s rally towards the upper median line (UML) of the descending pitchfork will push EUR/USD down again, while a USDX’s further drop towards the 96.00 level will boost EUR/USD. The US Dollar Index has violated the minor uptrend line signaling that the sellers are very strong in the short term.

EUR/USD has rallied after the failure to reach the 38.2% retracement level and now is traded right above the minor downtrend line and above the 1.1240 static resistance. The price has ignored also the R1 (1.1243) level, if the breakout above the near-term resistance levels is valid, EUR/USD is expected to increase at least till the upper median line (UML), or higher towards the R2 (1.1383) level.

You should be careful today as the high volatility could invalidate the breakout above the 1.1240, above the R1 (1.1243), and above the minor black downtrend line signaling a potential larger correction.

You can see that EUR/USD has developed a Falling Wedge pattern on the H4 chart, the price has jumped above the patterns resistance, but I believe that we need a strong confirmation here before we could consider going long again.

If the price will invalidate the breakout from this minor pattern, most likely EUR/USD will drop and will make a downside valid breakout and another lower low which will validate a further decline in the short term towards the 1.1 level.

Personally, I believe that only a valid breakout above the R2 (1.1383) level will really confirm a further increase towards fresh new high on EUR/USD, the R3 (1.1622) is seen as a potential upside target. The rebound could be only a temporary one if the USDX will increase again and if the EUR/USD will stay below the upper median line (UML).

[About The Author]

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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