EUR/USD is dropping like a rock right now after failing to reach the former highs and the weekly resistance. The pair is trading lower as the DXY (USDX) is rallying right now after some better-than-expected US data reported yesterday.
Still, you have to be careful because the US is to release high-impact data on Thursday and Friday. So the current drop could be erased if the economic figures disappoint the market. Technically, the pair has developed a Rising Wedge reversal pattern, but the formation is far from being confirmed.
EUR/USD Sell-Off!
EUR/USD has shown some overbought signs after failing to reach the weekly R1 (1.2261) level or the former high of 1.2266 level. Now it is trading below the uptrend line and under the weekly pivot point (1.2196).
The major support stands at 1.2132 former low. Only a valid breakdown below this level and through the weekly S1 (1.2127) could really announce a corrective phase and could validate the Rising Wedge pattern.
EUR/USD Outlook!
EUR/USD is in a neutral zone right now despite the current sell-off. The breakdown below the uptrend line and below the weekly pivot point (1.2196) could be invalidated if the US Dollar Index drops again.
We could have a selling opportunity if the pair drops and stabilizes below 1.2132 and under the S1. Such a breakdown could signal a steep fall towards the 1.2 psychological level and down to the S3 (1.1994).
On the other hand, a new higher high and a valid breakout above the R1 (1.2261) could invalidate the bearish scenario and could announce a larger growth ahead.
