The EUR/USD has retreated sharply in yesterday’s trading session and could resume the correction phase as the price has retested an important dynamic resistance line. The price has decreased because the US dollar index has managed to jump higher in US trading hours, remains to see how the price will react after the Euro-zone and US data will be released, technically the price is expected to drop further because the price looks too exhausted right now to be able to increase until will have a significant correction.

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The price has retested the dynamic resistance from the sliding parallel line and now could drop to reach the previous low from last Thursday, the major downside target remains at the lower median line (LML) of the ascending pitchfork, but remains to see what the ECB Press Conference will bring, we could have high volatility on this pair later. I’ve said that the outlook remains bearish on the short term, because the price has failed to close above the sliding parallel line, has failed to increase toward the previous high and toward the major horizontal resistance from 1.1451 level.

The EUR/USD continues to trade inside of an ascending channel, between the lower median line (LML) and the sliding parallel line (ascending dotted line), the currency pair has failed once again to approach the median line (ML) of the ascending pitchfork and now is expected to drop again.

The European Central Bank will publish the Minimum Bid Rate later today, the rate is expected to remain on hold at 0.00%, the ECB has cut the rate to a historical minimum in March, from 0.05%.  The pair continues to move into an extended sideways movement on the medium term, the price could continue to move inside of this range if the ECB will weaken the Euro.

Is less likely to see any change in the monetary policy today, but Mario Draghi could surprise the markets again, the ECB has added more stimulus measures in March, so no major changes are expected till this summer. Personally I’m expecting to see further easing in the coming months because I don’t believe that the current QE will have the power to boost the Euro-zone inflation.

The United States will release the Unemployment Claims report, the initial claims could increase from 253K to 265K jobs in the last week, moreover the Philly Fed Manufacturing Index could decrease from 12.4 to 8.1 points in April, the greenback could slip lower if the data will come worse than is expected.

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You can see on the H4 chart that the price has found temporary support at the median line (ml) of a short descending pitchfork and then has rebounded to retest the warning line (WL1), the pair is decreasing and most likely will approach the median line (ml), any drop below this dynamic support will open the door for more declines, the next downside target will be at the lower median line (lml).

The sentiment could change if the price will jump and consolidate above the warning line (WL1), we could have a broader correction on the medium term only if the price will jump and stabilize above the 1.1451 level.

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