- A new lower EUR/USD low could trigger further declines.
- False breakouts can signal a new leg higher.
- 07 psychological level stands as a potential target.
EUR/USD fell after US payrolls, average hourly earnings, the unemployment rate and revised UoM consumer sentiment were better than expected on Friday.
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The price is trading at 1.0736 at the time of writing, above yesterday’s low of 1.0723. Strong growth in the DXI boosted the dollar. However, we cannot rule out the possibility of a return to the upside.
Downward pressure remains high as the US ISM Services PMI reached 53.4 points, above the 52.0 points expected yesterday.
On the other hand, the German Trade Balance and Final Services PMI in Germany were better than expected, while the Eurozone PPI and Final Services PMI were in line with expectations.
Eurozone retail sales reported a 1.1% drop today, compared to expectations for a 0.9% drop, while German factory orders rose 8.9% even as traders expected a 0.1% drop.
Today, FOMC member Mester Speaks and BOC Governor Macklem’s remarks could move the markets.
Technical analysis of EUR/USD price: Oversold
From a technical point of view, the bias remains bearish despite the temporary spikes. The sell-off was stopped by the median line of the main descending villa (ML) and the level of 1.0723.
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Only false breakouts can herald exhausted sellers and can signal a bigger bounce. A new higher high, bouncing and closing above today’s high of 1.0762, confirms more gains.
On the contrary, staying near the lower obstacles can herald an imminent breakdown. A new lower low and making a valid breakout below the midline triggers more dips. If the price falls, S2 (1.0703) and the psychological level of 1.07 are potential downside targets.
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