The EUR/USD pair plunged in the last hours after failing to confirm a larger rebound. It was traded at 1.0385 at the time of writing. In the short term, the pair rebounded as the US dollar Index dropped a little. As you already know from my analyses, the bias remains bearish despite temporary rebounds.
Fundamentally, the euro weakened following negative eurozone data today. The Trade Balance came in at -31.7B versus -14.5B expected, while Industrial Production rose by 0.4% less versus 0.5% estimates,
USD remains bullish even if the US retail sales data came in worse than expected. The Retail Sales indicator reported a 0.3% drop versus 0.1% growth expected, while Core Retail Sales surged by 0.5% less versus 0.7% forecasted. In addition, the Empire State Manufacturing Index and the Import Prices reported worse than expected data as well.
Later, the FOMC could de decisive. The Fed is expected to increase the Federal Funds Rate from 1.00% to 1.50% and is expected to announce further hikes in the next monetary policy meetings.
EUR/USD Downside Continuation!
As you can see on the H1 chart, the EUR/USD pair failed to stabilize above the 1.0484 former high and above the median line (ml) signaling exhausted buyers and a potential sell-off. I've told you in my previous analysis that the pair could drop towards new lows if it stays under the median line (ml) and if it makes a new lower low.
Now, it has dropped below 1.0396 and it seems vulnerable to dropping deeper. 1.0354 stands as the next downside obstacle and target. DXY's further growth should force the EUR/USD to approach and reach new lows.
EUR/USD Forecast
Its failure to stabilize above the 1.0484 former high followed by the current breakdown below 1.0396 signals more declines ahead. The new lower low could represent a selling opportunity. A larger downside movement could be activated by a valid breakdown below 1.0354.
Don't forget that the FOMC could bring sharp movements in both directions in the short term, that's why you need to be careful.
