EUR/USD Upside Paused By The US Data!

The pair has retreated from 1.1385 Fridays high after the US economic figures were published, the Non-Farm Payrolls indicator was reported at 2509K, better versus the -7750K expectations, while the Unemployment Rate has decreased from 14.7% to 13.3% in May, surprising the markets.

Unfortunately, the Average Hourly Earnings indicator has decreased by 1.0%, but EUR/USD could still decrease in the short term if the US Dollar Index will rebound and recover after the last sell-off. The dollar has received a helping hand on Friday, but we still need confirmation that it will dominate the currency market again as the US currency is into a corrective phase.

USDX is traded at 96.94 level, it has failed to reach the 96.36 static support as the US data has boosted the dollar. The USDXs drop was natural and expected after another rejection from the upper median line (uml) of the orange descending pitchfork and after downside breakout from the extended range, triangle pattern.

The 96.36 - 96.00 area represents a major support zone, the lower median line (LML) of the major ascending pitchfork is seen as strong dynamic support as well, so a significant rebound could develop soon if the index will be rejected or if it will register only a false breakdown below the downside obstacles.

The bearish pressure is still high on the USDX as long as it is traded within the orange descending pitchfork, below the upper median line (uml), so only a valid breakout from this pitchfork could announce a broader upside movement.

When the USDX drops, EUR/USD increases, and when the index increases, the pair goes down, you can use this strong negative correlation in trading. EUR/USD could extend its current drop only if the USDX will come back towards the 98.00 psychological level and towards the upper median line (uml).

Personally, I would like to see a reversal pattern around the 96.00 psychological level because only a confirmed leg higher will validate a EUR/USD downside movement in the upcoming period. A USDXs further drop through the 96.36 and 96.00 levels, and below the lower median line (LML) of the ascending pitchfork will bring an important EUR/USD rally in the medium to the long term.

EUR/USD is traded near an important resistance area, represented by the upper median line (UML) of the descending pitchfork, and by the R2 (1.1383) level, the bullish momentum was stopped by these obstacles.

The aggressive upside movement was natural and expected after the upside breakout from the extended sideways movement, above 1.0990 - 1.1000 area, and above the median line (ML) of the descending pitchfork. EUR/USD has escaped also from an important triangle, so the bullish momentum wasnt a surprise.

The outlook is bullish on the Daily chart, despite the minor drop, a valid breakout above the upper median line (UML) of the descending pitchfork, and above the R2 (1.1383), another higher high, will signal a further increase towards the R3 (1.1622) level.

I believe that only several retests or false breakouts above the upper median line (UML) will really confirm a significant drop in the short term. Also, a drop below the 1.1200 could suggest a further drop towards the 1.1 level again.

Another higher on EUR/USD, a valid breakout above the 1.1494 level, will confirm an upside reversal and an uptrend in the medium to the long term.

[About The Author]

Olimpiu Tuns is a seasoned market analyst / trader / trainer on the financial markets with expertise in forex, cryptocurrencies, commodities, futures, options, index, CFD for more than 8 years. He is also a famous blogger in both technical and fundamental analysis, trading signals, trade setups, etc.

He has worked as a Market Analyst / Consultant for three major Brokerage companies, Admiral Markets, MultiBank Exchange Group and InstaForex (live webinars, market analysis, educational materials, video analysis, video tutorials, ghostwriting, content creator), as a Social Media Manager and as a Financial Markets & Crypto Analyst / Contributor for very important news portals/blogs (investing.com, benzinga.com, forexalchemy.com actionforex.com, countingpips.com), websites, educational platforms (Forex.Academy, Forex.Today), independent clients, etc.

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