- Taking out the uptrend line should announce more declines.
- A new lower low activates a larger downside movement.
- The manufacturing and services data should shake the markets.
The EUR/USD price is trading in the red, below 1.0900 at the time of writing. The downside pressure is high, so more declines are in the cards.
The US dollar’s strong rebound weighed down on the risk assets. Yesterday, the US Existing Home Sales and CB Leading Index came in better than expected, while Unemployment Claims and Current Account reported poor data.
Today, the manufacturing and services figures should bring high volatility and sharp movements. German Flash Manufacturing PMI reported 41.0 points versus 43.2 in the previous reporting period. German Flash Services PMI dropped from 57.2 points to 54.1 points. The dismal German data ignited the bears, hitting fresh weekly lows.
Eurozone Flash Manufacturing PMI remained at 44.8 points, while Eurozone Flash Services PMI could drop to 54.4 points from 55.1 points. So, the manufacturing sector remains in contraction territory, while the expansion could slow down in the services sector.
Furthermore, the US Flash Manufacturing PMI is expected at 48.6 points confirming contraction, while Flash Services could drop from 54.9 points to 53.9 points, signaling a slowdown in expansion.
EUR/USD price technical analysis: Massive drop
From the technical point of view, the EUR/USD pair challenges the uptrend line. This represents dynamic support.
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As you can see on the hourly chart, the price ignored the descending pitchfork’s median line (ml), signaling a strong downside pressure. Taking out the uptrend line should open the door for more declines.
Still, the former low of 1.0891 represents a strong downside obstacle. So, we have a demand zone above this level. Registering false breakdowns below the uptrend line indicates that the correction ended, and buyers could take it higher again.
A larger downside movement could be activated only after making a new lower low, after closing below 1.0891.
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