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  • The EUR/USD pair could be attracted by the lower median line (lml) after ignoring the weekly S1.
  • Escaping from the up channel’s body could signal that the EUR/USD pair could resume its major downtrend.
  • Only dovish FED could invalidate a downside continuation.

Our EUR/USD forecast sees the pair drop like a rock at the time of writing as the Dollar Index rallies. Technically, the currency pair ended its rebound which was only a temporary one.

The bias remains bearish, so DXY’s further growth signals that the EUR/USD pair could approach and reach fresh new lows.

The price ignored yesterday’s poor US data reported by the Flash Services PMI and by the Flash Manufacturing PMI. Today, the German ifo Business Climate raised from 94.8 to 95.7 points even if the traders expected a potential drop to 94.6 points.

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Later, the US CB Consumer Confidence could bring high volatility and strong action. The economic indicator is expected to drop from 115.8 to 111.4 points. A deeper drop could weaken the greenback ahead of the FOMC. 

As you already know, tomorrow, the FOMC meeting could really shake the markets and could bring sharp movements. The Federal Reserve is expected to keep its Federal Funds Rate at 0.25% in the January meeting.

Still, the FOMC Statement and the FOMC Press Conference could bring really high volatility, that’s why you should be careful.

EUR/USD Forecast: Price Technical Analysis – Sell-Off

eur/usd forecast

From the technical point of view, the pair tested and retested the descending pitchfork’s median line (ml) confirming this line as strong dynamic resistance.

Now, it has plunged through the uptrend line signaling strong sellers. As you can see, the EUR/USD pair has taken out also the weekly S1 (1.1285) level signaling potential deeper drop.

The next downside target is represented by the descending pitchfork’s lower median line (lml). After stabilizing below the median line (ml), the lower median line (lml) could attract the price. Escaping from the up channel’s body, the EUR/USD pair signaled a downside continuation.

A temporary rebound or a sideways movement could help the sellers to catch new downside movements. In my opinion, only a dovish FOMC could change the sentiment and could announce a new leg higher. 

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