The EUR/USD pair drops like a rock in the short term as the Dollar Index continues to grow. As you already know from my previous analysis, DXY was expected to rebound after reaching the 97.73 key downside obstacle.
DXY's further growth should push EUR/USD towards new lows. Surprisingly or not, the USD appreciated, even though the US data came in mixed today. The Core PCE Price Index rose by 0.4% matching expectations, Unemployment Claims jumped unexpectedly higher from 188K to 202K above 195K expected, while Chicago PMI was reported at 62.9 points above 56.9 expected. In addition, Personal Income rose by 0.5% matching expectations, while Personal Spending rose only by 0.2% compared to the 0.5% estimated.
On the other hand, the Euro has taken a hit from the Euro-zone Unemployment Rate which dropped from 6.9% to 6.8%, failing to reach 6.7% estimates, and from the German Retail Sales which registered only a 0.3% growth less versus 0.5% forecasts and after a 1.4% growth registered in the last reporting period.
EUR/USD Strong Sell-Off!
The EUR/USD pair plunges after failing to reach the 1.1186 key level and after registering only false breakouts above the median line (ML). Now, it's almost to reach the weekly R1 (1.1050) which stands as a potential static support.
After its failure to stay above the median line (ML), the rate could be attracted by the lower median line (LML). This is seen as a dynamic support. Technically, the EUR/USD pair could try to rebound after the current massive drop.
EUR/USD Outlook!
Consolidation above the R1 (1.1050) and retesting the lower median line (LML) could signal a new bullish momentum. The rate could come back to test and retest the 1.1121 resistance. In my opinion, only a valid breakdown below the lower median line (LML) could activate a larger drop.
As long as it stays within the ascending pitchfork's body, EUR/USD could increase again.
