EUR/USD has declined as low as 1.0992 yesterday, but the sellers weren't able to keep the price below the 1.1000 psychological level. The currency pair is trading at 1.1011 level at this moment as the USDX has come back down to retest the 98.00 level.
As you already know, the Federal Reserve left the Federal Funds Rate steady at 1.75%, as expected, but unfortunately, the USD was punished by the poor US data. The Goods Trade Balance widened from -63.0B to -68.3B, much below the -64.5B estimate, while the Prelim Wholesale Inventories edged down by 0.1%, though analysts had expected a 0.1% uptick.
Pending Home Sales plunged by 4.9% in December, whereas economists had expected to see a 0.5% increase after a 1.2% gain in the previous month. You should keep an eye on the economic calendar today, as the Advance GDP, Advance GDP Price Index and the Unemployment Claims from the US could bring life to EUR/USD. If the figures are better than expected, the USD could drive the pair much lower.
EUR/USD has failed to stabilize below the 1.1 level, but the bias remains bearish as long as the price stays below the median line (ml) of the descending pitchfork. The price has failed to reach and retest the median line (ml), so EUR/USD remains under high selling pressure.
A further increase of the USDX after the 98.00 level retest will signal a EUR/USD drop below the 1.1000 level again. More sellers will be attracted if EUR/USD will make a valid breakdown (close and stabilize) below the 1.1 psychological level.
- Trading Recommendation and Forecast
We can go short on EUR/USD after a valid breakdown below the 1.1000 level after a lower low with potential targets at 1.0925 and at the lower median line (lml) of the descending pitchfork. Stop Loss should be placed above 1.1027 level. The outlook is bearish as long as the pair is trading below the median line (ml).
Right now, I can't talk about a potential rebound, but you should know that another false breakdown (rejection) below the 1.1 level and a breakout above the median line (ml) could signal bullish momentum on the short term towards the upper median line (uml). This scenario could happen only if the price fails to close and stabilize below the 1.1 psychological level.
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