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EUR/USD upside stopped by 1.13 psychological level

EUR/USD was dropping at the time of writing after its failure to confirm the breakout above the 1.13 psychological level. The currency pair ended its rebound. You already know from my analysis that EUR/USD could develop only a temporary rebound as the Dollar Index maintains a bullish bias despite a temporary retreat.

Fundamentally, the German Prelim CPI and the Spanish Flash CPI come in better than expected but the DXY's rally forced the pair to drop. Earlier, the US Pending Home Sales registered a 7.5% growth versus only 0.8% growth expected and after a 2.4% drop registered in the previous reporting period.

Still, you have to be careful during the week as the US is to release high-impact indicators such as the ADP Non-Farm Employment Change, Non-Farm Employment Change, and the Unemployment Rate.

EUR/USD bearish bias


EUR/USD registered a false breakout with great separation through the confluence area formed at the intersection between the 23.6% retracement level with the inside sliding line (SL). Now it stands at 1.1263 below the weekly pivot point (1.1274).

Still, this could be only a temporary drop. The pair could find support o the 1.1239 or lower on the weekly S1 (1.1217) and on the Descending Pitchfork's lower median line (LML). Technically, a temporary decline was expected after its previous rally.

The current drop could represent a minor flag that could announce a new bullish momentum. Coming back above the weekly pivot point (1.1274) and making a valid breakout through the sliding line (SL) could announce potential growth towards the median line (ML).

EUR/USD outlook

Technically, the bias remains bearish as long as EUR/USD stands under the inside sliding line (SL). Still, you have to be careful as the fundamentals will drive the pair. The Dollar Index challenges a dynamic resistance.

The material has been provided by InstaForex Company -