EUR/USD opened with a gap down but the buyers pushed the price higher towards 1.1246 today's high. Technically, the pair bounced back after reaching a strong demand zone. As I've said in the previous week, the currency pair could move sideways in the short term. EUR/USD rebounded only because the DXY dropped.
The Euro received a helping hand from the Spanish Flash CPI which reported a 7.4% growth versus 7.1% expected. On the contrary, the greenback was punished by the Chicago PMI which dropped from 65.2 to 56.3 points, far below 62.1 estimates. Tomorrow, the US ISM Manufacturing PMI is seen as a high-impact event.
EUR/USD Down Channel As Bullish Pattern!
As you can see on the H4 chart, the price retested the 1.1121, the pitchfork's lower median line (LML), and the channel's downside line. Now, it has rebounded, but its failure to reach at least the weekly pivot point of 1.1255 or to close the gap down signaled that the buyers are exhausted.
As long as it stays below the weekly pivot point and below the downtrend line, EUR/USD could develop a new sell-off.
EUR/USD Outlook!
In the short term, the buyers seem exhausted, so we cannot exclude a new drop. As I've said in the previous week, personally, I'm expecting the EUR/USD to move somehow sideways above 1.1121 and the downtrend line.
EUR/USD is trapped between 1.1121 and 1.1482 levels, so an extended sideways movement is possible. A new selling opportunity could be signaled by a false breakout above the downtrend line.
On the other hand, coming back to test and retest the 1.1121 could bring new buying opportunities.
