The currency pair increased a little and tries to stay above a crucial support level. Price is fighting hard to recover after the massive drop, but I’m afraid that it will drop towards fresh new lows in the upcoming period.

The rate is challenging a very strong confluence area, a valid breakdown will accelerate the sell-off, while a false breakdown will signal a bounce back.

It remains to see what will happen on the USDX, which is trading in the red right now after the impressive bullish movement.

The Euro las lost altitude in the last two hours as the Euro-zone data have failed to impress. The CPI Flash Estimate rose by 1.2%, less versus the 1.3% estimate and versus the 1.3% in the former reading period, while the Core CPI Flash Estimate surged only by 0.7%, less versus the 0.9% estimate and versus the 1.0% growth in the former reading period. Moreover, the PPI increased by 0.1%, matching the 0.1% estimate and the 0.1% growth in the former reading period.

You should be careful because the United States data will shake the markets, the ISM Non-Manufacturing PMI could drop from 58.8 to 58.1 points, the Unemployment Claims could increase from 209K to 225K jobs in the previous week, while the Trade Balance could increase from -57.6B to -50.0B. The Final Services PMI is expected to remain steady at 54.4 points, the Factory Orders could increase by 1.3%, more versus the 1.2% growth in the former reading period. The Prelim Nonfarm Productivity and the Prelim Unit Labor Costs will be released as well and are expected to increase more compared to the last reading period.

The rate has broken through the confluence area formed between the median line (ML) of the ascending pitchfork and the median line (ml) of the red descending pitchfork. A valid breakdown will send the rate towards the lower median line (lml) of the red descending pitchfork.