EUR/USD Forecast: Downside Breakout, Aims at Key 1.1612 Level

• The EUR/USD pair dropped to as much as 1.1632 while the DXY rallied.
• 1.1612 is seen as a critical support level – a valid breakdown here would indicate larger drop ahead.
• In the short term, the EUR/USD could rebound. A temporary bounce back could help sellers to go short.

EUR/USD forecast  sees the pair plunged, with the Dollar Index has managed to reach fresh new highs. DXY has climbed as much as 94.04 level boosting the greenback.

As you already know from my analyses, the EUR/USD pair could extend its downside movement if the Dollar Index approaches and reaches new highs.

The pair has ignored strong and critical support levels announcing strong sellers and a downside continuation. Still, after this amazing sell-off, the price could try to rebound. Temporary rebounds could help the sellers to go short again.

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The USD resumed its growth even if the US CB Consumer Confidence has come in worse than expected. Today, the German Import Prices and the Spanish Flash CPI have beaten expectations, but the EUR/USD pair has resumed its drop. 

ECB President Lagarde and Fed Chair Powell speeches in a virtual panel discussions at the ECB Forum have an impact on the EUR/USD forecast.

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Dollar Index Price Technical Analysis: Dynamic Resistance Breakout

The Dollar Index has managed to jump above the fourth warning line (wl4) as well which represented a dynamic resistance. Validating its breakout may signal an upside continuation. Further growth could push the USD higher versus its rivals. 

Technically, its breakout above the 93.43 and through 93.72 announced that the Dollar Index could resume its upside journey. 

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EUR/USD Forecast: Price Technical Analysis

 

The EUR/USD pair plunged and now it has reached the descending pitchfork’s median line (ML), representing a dynamic support. It has ignored the 1.1663 and the weekly S2 (1.1647). It remains to see how it will react here at the median line (ML) which stands as a potential dynamic support.

As you can see on the H4 chart, the EUR/USD escaped from the rate pattern between 1.1663 and 1.1907 levels. Getting out of this pattern may signal a deeper drop.

Technically, the 1.1612 static support, historical level, is seen as a critical obstacle. Dropping and closing below it, registering a valid breakdown may activate a larger corrective phase. 

In the short term, it could develop a temporary rebound if the Dollar Index slips lower after its amazing rally.

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