The EUR/USD posted little gains in the morning and tries to resume the yesterday’s bullish candle. You shouldn’t be too enthusiastic about the current increase because the rebound could be only temporary. Could climb higher only to test and retest the broken support levels (support turned into resistance) before will resume the corrective phase.
The price is trading in the green right now only because the US dollar index is trading in the red again. Unfortunately, the USDX didn’t found enough buyers to be able to push it higher on the Daily chart. Technically the USDX seems oversold, but is still trapped under a strong dynamic resistance, only an accumulation will signal a reversal and a potential USD dominance.
The Euro could increase further in the upcoming hours as the Euro-zone data have come in better than expected. The Employment Change rose by 0.4% in the second quarter, beating the 0.3% estimate, we’ll see what the Industrial Production will bring later, the indicator is expected to increase by 0.1% versus a 0.6% drop in the former reading period.
The German WPI increased by 0.3%, more versus the 0.1% estimate, while the German Final CPI rose by 0.1% in the previous month, matching expectations and the 0.1% growth in the former reading period.
Price is almost to reach the confluence area formed between the upper median line (uml) of the minor descending pitchfork with the upper median line (UML) of the ascending pitchfork. A rejection will send the rate tumbling on the short term.
Technically is somehow expected to drop on the short term after the false breakout above the outside sliding line (SL) and above the upper median line (uml) of the descending pitchfork. Price could develop a minor Rising Wedge pattern on the short term, will drop significantly if this pattern will be confirmed.
However we still need a confirmation that will drop again, the downside targets will be at the median line (ml) of the descending pitchfork and lower at the median line (ML) of the ascending pitchfork.