- The EUR/USD pair signaled that the leg higher is over.
- A new lower low activates a larger drop.
- The US data could be decisive in the short term.
The EUR/USD price ended its strong rebound. Now it may turn to the downside again. Fundamentally, the USD received a helping hand from the US data yesterday.
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The ADP Non-Farm Employment Change was reported at 208K above 200K expected versus 185K in the previous reporting period, while the ISM Services PMI came in at 56.7 points above 56.0 points expected. In addition, the Final Services PMI and Trade Balance also came in better than expected.
Earlier, the Euro took a hit from the German Factory Orders. The indicator reported a 2.4% drop in August versus a 0.8% drop expected. Later, the Eurozone Retail Sales may report a 0.3% drop in August versus the 0.3% growth in July.
On the other hand, the US Unemployment Claims could be reported higher at 205K in the last week versus 193K in the previous reporting period.
DXY price technical analysis: Probability of upside swing
The Dollar Index rallied after reaching the 110.01 – 110.26 zone. It has broken out from the descending channel pattern signaling that the leg down ended. Still, after its aggressive breakout through the descending trendline, the index found resistance at 111.47 – 111.57, trying to test the near-term downside obstacles before jumping higher. A new higher high may activate a fresh upside wave, resulting in the USD’s appreciation versus all its rivals and not only the Euro.
EUR/USD price technical analysis: Retesting the broken trendline
As you can see on the hourly chart, the EUR/USD pair found resistance at parity after reaching the 1.0000 psychological level. Now the pair has dropped below the trendline announcing that the leg higher could be over and the sellers could take the lead again.
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After its amazing sell-off and aggressive breakdown, the price returned, trying to retest the broken uptrend line. The pair has found resistance and the weekly R1 (0.9920), and now it has turned to the downside again. A new lower low, dropping and closing below 0.9834, activates a larger drop towards and below yesterday’s lows.
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