Our EURUSD forecast observed the pair plunging in the past few hours and is now located in sellers’ territory again. It has invalidated a potential swing higher after failing to stabilize above the weekly pivot point (1.1871) level.
Surprisingly or not for forex traders, EUR/USD plunged even though the US data came in worse than expected. The ISM Services PMI was reported lower at 60.1 versus the 63.4 forecast, while the Final Services PMI has decreased from 64.8 to 64.6 points.
Poor German and European data pulls down the euro
The euro was punished by the poor eurozone and German data today. The German Factory Orders dropped unexpectedly by 3.7% in May even if the specialists have expected a 0.9% growth.
Furthermore, the German ZEW Economic Sentiment was reported at 63.3, far below 75.0 estimate, while the eurozone ZEW Economic Sentiment decreased from 81.3 to 61.2, under the 79.0 forecast.
EURUSD forecast – technical analysis: resistance at 1.1895
As you can see on the 4-hour chart, EURUSD failed to stabilize above the weekly pivot point of 1.1871 level. It has increased to as much as the 1.1895 level today, where it has found resistance again.
The false breakout with the large separation above the pivot point and through to the 1.1884 high, indicates that the downside movement could continue. EURUSD has reached the downtrend line again and it has closed below the 78.6% retracement level.
The weekly S1 (1.1799) is seen as a downside obstacle as well. Dropping and closing under this level could validate more declines. Still, in the short term we cannot exclude a temporary rebound. EUR/USD could come back to test and retest the 1.1835 and 1.1847 levels before dropping deeper.
The S2 (1.1734) and the 100% Fibonacci line could be seen as downside targets if the pair resumes its decline.
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