EURUSD is still trending lower inside its descending channel with lower highs and lower lows since mid-January. Price looks prime for a test of the channel resistance again but the 61.8% Fib already seems to be keeping gains in check.

This lines up with the 200 SMA dynamic inflection point that is above the 100 SMA to confirm that the path of least resistance is to the downside. In other words, the downtrend is more likely to gain traction than to reverse.

RSI is still pointing up, though, so there must be some bullish momentum left. Stochastic is also turning higher on its earlier move down to signal that buyers might have some energy left in them for a larger correction. The line in the sand is at the 1.1350 minor psychological resistance at the channel top as a break above this could spur a reversal.

A continuation of the slide could take EURUSD down to the swing low around 1.1175 or the bottom of the channel closer to 1.1100.

The euro is under pressure on account of a downbeat ECB outlook but it seems to have taken advantage of dollar weakness last week. After all, traders might be pricing in expectations for the FOMC statement this week, during which the central bank could reiterate its more cautious stance.

Keep in mind, however, that another round of flash PMI readings are due from the euro zone before the end of the week. These are considered leading indicators so their outcome could provide previews of how the top-tier figures might turn out. Another set of disappointing results could confirm that the slowdown is far from over and that there might be scope for the ECB to ease again. On the other hand, upbeat figures could suggest that the recovery is gaining traction.