- The DXY’s drop forced the USD to depreciate.
- The EUR/USD pair could approach and reach the weekly R1.
- The pitchfork’s lower median line (LML) stands as a dynamic support.
The EUR/USD price started to rise after failing to stabilize below the 1.0000 psychological level. Now, it was trading at 1.0140 at the time of writing.
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The price turned to the downside as the Dollar Index is in a corrective phase. Technically, after its massive drop, the currency pair was expected to rebound. The current bounce back could help the sellers to go short again.
Still, it remains to see how large the throwback will be. Surprisingly or not, the USD dropped even if the US retail sales data came in better than expected on Friday. The Retail Sales indicator rose by 1.0% versus 0.9% expected after a 0.1% drop in the previous reporting period, while the Core Retail Sales surged by 1.0% versus 0.7% estimated.
In addition, the US Prelim UoM Consumer Sentiment also came in better than expected, at 51.1 points above the 49.0 forecasted. Unfortunately for the USD, Industrial Production, Capacity Utilization Rate, and Business Inventories were worse than expected.
Dollar Index price technical analysis: Corrective phase
The Dollar Index showed overbought signs after failing to stay above 108.56. Breaking below 107.78 and making a new lower low signaled a more significant correction in the short term. The current sell-off forced the greenback to depreciate versus its rivals. It could approach and reach new lows if it stays under the median line (ml).
EUR/USD price technical analysis: Throwback
The EUR/USD pair rallied after taking out the resistance represented by the downtrend line. The breakout above the downtrend line and through 1.0071 signaled a more considerable rebound. The bias is bullish as long as it stays above the pitchfork’s lower median line (LML).
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The next upside target is represented by the weekly R1 (1.0200). It could approach new highs despite temporary retreats. A valid breakout above the R1 may activate an upside continuation. The lower median line (LML) acts as a dynamic support. Only a valid breakdown below this obstacle could announce a new sell-off.
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