- EUR/USD is looking south after a failed bullish breakout.
- A drop to 1.1263 looks likely on bearish technical setup.
- The US is considering imposing additional tariffs on the European Union.
EUR/USD is currently trading at 1.1287, having invalidated a bullish breakout with a 0.73% drop on Monday.
The currency pair was looking north a week ago with an inverse head-and-shoulders breakout on the daily chart. Further, the common currency had found acceptance above the 200-day moving average.
The follow-through to the big breakout, however, was anything but bullish, with the pair restricted largely to the 1.1350-1.14 trading range for three days to June 28.
The lack of strong follow through, coupled with dismal Eurozone German and Eurozone PMI numbers ended up enticing sellers on Monday. The pair nosedived below the 200-day MA of 1.1342 and the inverse head-and-shoulders neckline support, invalidating the bullish breakout confirmed on June 21.
As a result, the path of least resistance is now to the downside and with the US considering additional $4 billion tariffs on the European Union goods, a drop to the immediate support at 1.1263 looks likely.
On the higher side, a break above the recent high of 1.1412 is needed to revive the bullish outlook.
Daily chart
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Trend: Bearish
Pivot points
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