EUR/USD is trading in the red and it seems ready to drop much deeper again. Price has shown some exhaustion signs in yesterday’s trading session, but we still need a confirmation that it will drop significantly. It is still located right above some very important support levels, so you should wait for a valid breakdown.
The USD could increase as the US data have come in better than expected, the PPI increased by 0.1%, beating the 0.0% estimate, while the Core PPI rose by 0.3%, exceeding the 0.1% estimate. The Euro-zone ZEW Economic Sentiment was reported at -21.0 points, better versus the -23.2 estimate and versus the -22.0 in the former reading period, while the German ZEW Economic Sentiment increased to -17.5, even if the specialists have expected to see a further drop from -24.1 to -25.0 points.
USDX is trading in the green and it is somehow expected to climb much higher after the false breakdown below the SL1 of the descending pitchfork and upside 50% Fibonacci line of the ascending pitchfork.
The next upside target should be at the inside sliding line (sl1), which it represents a very strong resistance. I’ve told you in the previous reports that the perspective remains bullish as long as the rate stays above the 50% Fibonacci line.
Only a valid breakout above the sliding line (sl1) it will announce a significant upside movement, the USD will dominate the currency market in this situation.
EUR/USD has made a false breakout above the lower median line (lml) of the ascending pitchfork signaling that we may have a significant drop. It has slipped below the outside sliding line (sl) of the minor ascending pitchfork and now approaches the 1.1301 static support and 150% line. A valid breakdown will open the door for a further drop.
A larger drop will be confirmed by a valid breakdown below the sliding line (SL) of the descending pitchfork. We could have a valid breakdown if the rate will drop and will stabilize below the 150% line of the minor ascending pitchfork.