- The bias is bearish as long as it stays under the upper median line (UML).
- In the short term, a rebound could be natural.
- Taking out the median line (ml) confirms a larger drop.
The EUR/USD price extended its downside movement, trading at 1.0641 at the time of writing. The bias is bearish, so more declines are in the cards.
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DXY’s upside continuation confirmed USD’s strength versus its rivals. Fundamentally, the USD received a helping hand from the US economic data yesterday.
The PPI rose by 0.7% in January, beating the 0.4% growth expected and after the 0.2% drop in December, while Core PPI surged by 0.5% versus the 0.3% growth estimated.
In addition, the Unemployment Claims indicator came in at 194K last week, below the 200K expected versus 195K in the previous reporting period.
Building Permits and Housing Starts came in worse than expected, but the greenback ignored these figures and continues to grow.
Today, the German PPI dropped by 1.0% even if the traders expected a potential 0.2% growth. Moreover, the French Final CPI came in line with expectations.
Later, the Eurozone Current Account could impact the short term. The US is to release the CB Leading Index and Import Prices. Positive US data could lift the greenback a little. Still, after its strong growth, the USD could drop a little before resuming its growth.
EUR/USD price technical analysis: Dynamic support
As you can see on the hourly chart, the price stabilized below the 61.8% retracement level. Now it has ignored the 1.0669 and 1.0655 support levels.
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The pair challenges the median line (ML) of the descending pitchfork. This represents dynamic support. In the short term, we cannot exclude a temporary rebound. The price could return to retest the immediate resistance levels before going down.
The upper median line (UML) stands as a strong dynamic resistance. As long as it stays within the pitchfork’s body, the EUR/USD pair could extend its downside movement. A valid breakdown below the median line (ml) may announce a further drop toward the lower median line (LML).
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