FX.co ★ EUR/USD imminent drop

EUR/USD was dropping at the time of writing as the Dollar Index is bullish again after ending its retreat. The pair could extend its sell-off as the bounce-back looks complete. As you already know from my analysis, EUR/USD could drop deeper in the short term after breaking out strong downside obstacles.

Today, USD was boosted by the US economic data. The Current Account, Housing Starts, and Building Permits have come in better than expected. Tomorrow, the FOMC could trigger sharp movements not only in EUR/USD but in the market across the board. The Fed is expected to keep its monetary policy unchanged.

EUR/USD rebound is over

The EUR/USD pair tried to retest the broken warning line (wl1) of the Ascending Pitchfork but failed, thus signaling high selling pressure. The bias is bearish as long as it stays below the downtrend line and under the warning line (wl1).

A new lower low, a bearish closure below 1.1700 may signal a further drop towards the weekly S1 (1.1684) or down to 1.1663 lower low.

Outlook

The bearish scenario could be invalidated only by a valid breakout above the downtrend line. It's premature to assump something like this as EUR/USD is located far below this dynamic resistance.