EUR/USD plunges aggressively December 09, 2016

The EUR/USD has edged lower today and has resumed the yesterday’s sell-off, has dropped significantly and now is pressuring an important support level, is also very close to hit another downside obstacle, we’ll see how will react. We have to wait for a valid breakout before we go short on this pair, we had another false breakout on Monday, so we have to be patient till we’ll have a fresh trading signal, right now we don’t have a trading opportunity because the rate is located right above a major support area.
The price has dropped sharply after the ECB dovish speech, the currency traders were disappointed and have started to buy the greenback again, the USD has increased versus the other currencies, except the Loonie as the USDX index has rallied as well.
The Euro has also dropped because the Euro-zone data have failed to impress today, the French Industrial Production has dropped by 0.2% in October, has come much worse versus the 0.6% growth expectation, has remained in the negative territory and has weakened the European currency, while the French Gov Budget Balance has dropped further, from -83.0 to -85.5. Moreover the German Trade Balance has disappointed because has come below the economists estimate, the surplus has dropped from 21.1B to 20.5B, even if the estimate was 20.8B.
The rate has decreased significantly in the last hours as the USD was boosted by the Prelim UoM Consumer Sentiment has increased unexpectedly higher, from 93.8 to 98.0 points, beating the 94.3 estimate. The Consumer Sentiment has reached the highest level after January 2015, so the USD is expected to climb higher. Moreover the Prelim UoM Inflation Expectations rose by 2.3%, while the Final Wholesale Inventories have dropped by 0.4%, matching expectations, actually has remained steady at the 0.4% drop.

EURUSDd-2

The rate has extended the yesterday’s sell-off and now is challenging the lower median line (lml) of the descending pitchfork and is very close to hit also the 1.0521 static support level, I’ve said in my previous analysis that the price could be attracted by the confluence area formed at the intersection between the 1.0521 level and the lower median line (lml) of the descending pitchfork if will fail to close above the median line (ml). I’ve said also that the perspective remains bearish as long as the rate is trading inside the descending pitchfork’s body and below the outside sliding parallel line (descending dotted line).

EURUSDh-1

I’ve added the H4 chart to show you better the price action, the rate could find temporary support at the lower median line (lml) of the descending pitchfork, you can notice that has increased a little, could increase further if the USDX will slip lower, personally I’m expecting to see a sideways movement ahead of the FOMC meeting. However we’ll have a selling opportunity if the price will fallen below the lml and below the 1.0521 support and if will come to test and retest the confluence between these two support levels.