EUR/USD has decreased significantly in the last weeks as the price has failed to take out the 1.1448 static resistance. The USD was boosted by the USDX's rally, the index has ignored the upside obstacles and has managed to reach fresh new highs.
The drop was accelerated also by the FED measures to fight the COVID-19 effects and economic damages. The USD remains very strong, despite the stimulus measures because the currency is used as a safe-haven instrument in risk aversion situations. The coronavirus epidemic could harm the eurozone economy, that's why EUR/USD could drop deeper on the medium to the long term, but we cannot exclude a minor rebound on the short term.
EUR/USD drop was stopped by the 1.0653 level, you can notice that the price has failed to close below this obstacle and now it has managed to come back above the median line (ml) of the descending pitchfork.
The pair has been moving sideways between the 100% and the 113% levels, an upside breakout from this range could signal a potential increase on the short term, the first upside target is represented by the upper median line (uml) of the descending pitchfork, the Pivot Point (1.0857) could be considered as a target as well.
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EUR/USD is still under massive selling pressure as long as it is located within the descending pitchfork's body, the current sideways movement could be only a distribution before the price resumes the downside movement.
A valid breakdown below the 1.0653 level and below the median line (ml) could validate a further drop towards the weekly S1 (1.0478) level. The pair could be attracted by the lower median line (lml) only if it drops and stabilizes below the median line (ml).
The Stochastic indicator has managed to breakout above the downtrend line, signaling a potential rebound. However, a potential long opportunity and a reversal will appear only if the price makes a valid breakout above the upper median line (uml) of the descending pitchfork and above the weekly Pivot Point (1.0857) level.
EUR/USD could increase significantly only if the USDX makes a valid breakdown below the 101.08 level, or it could resume the downside movement if the index jumps above the 103.00 former high.
