EURUSD has formed lower highs and lower lows inside a falling channel on its 1-hour chart. Price has bounced off support and has since pulled up to the mid-channel area of interest that lines up with the 38.2% Fib.

If this is enough to keep gains in check, price could resume the slide to the swing low at 1.1950 or the channel bottom. A larger pullback, on the other hand, could mean a test of the 61.8% Fib near the channel top at the 1.2100 major psychological mark.

The 100 SMA is below the 200  SMA to confirm that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. The 200 SMA is near the 50% Fib to add to its strength as resistance as well, and the gap between the indicators is widening to reflect stronger selling pressure.

Stochastic is already turning lower to indicate that sellers are taking over from current levels. RSI is also heading down, and both oscillators have plenty of room to go south before reflecting oversold conditions or exhaustion from sellers.

There are no major reports due from the eurozone, although German trade and industrial production numbers might be worth watching. The EU quarterly economic forecasts report is also up for release, and significant downgrades could mean losses for the shared currency.

Meanwhile the dollar has CPI figures due, although most of the market attention might be on the vaccine rollout and government stimulus. These have the potential for boosting demand for the dollar versus the euro, as the latter deals with more uncertainty related to the pandemic and even in politics.

Do note that the trading week is shortened leading up to the Chinese New Year holidays, so profit-taking on any strong moves might also be quick.