EUR/USD plunged in the short term as the Dollar Index has managed to register an amazing rally. As you know from my analysis, DXY's growth forces EUR/USD to drop. It remains to see how long the current sell-off will be as the currency pair is pressuring dynamic support.
It's trading at 1.1846 lower versus 1.1909 Friday's high. The Euro was punished by the Eurozone ZEW Economic Sentiment index which was reported lower at 31.1 points versus 35.3 expected and compared to 42.7 in the previous reporting period, while the German ZEW Economic Sentiment index dropped from 40.4 to 26.5, far below the 30.2 estimates.
EUR/USD turned to the downside
EUR/USD has found resistance at the 1.1908 former high. It has failed to reach the ascending pitchfork's upper median line (uml). Now it has come back to pressure the median line (ml) which stands as dynamic support after ignoring the weekly pivot point (1.1856).
1.1804 level, the weekly S1are seen as downside obstacles as well. Closing and stabilizing under the median line (ml) could signal further drop towards the S1 and down to the descending pitchfork's upper median line (UML).
Trading conclusion
Staying above the median line (ml) and coming back above the weekly pivot point (1.1856) level could signal new bullish momentum. The current decline could represent a down channel, a flag, which is seen as a continuation pattern.
Still, a larger upwards movement could be activated by a valid breakout through the 1.1908 former high.
The material has been provided by InstaForex Company - www.instaforex.com