EUR/USD Under Lot Of Bearish Pressure

EUR/USD is trading at 1.1253 level and is struggling to stay higher after the last days aggressive drop. The pair has opened with a gap down, it has increased as little in the last hours, but the selling pressure is high as the price has failed to take out an important dynamic resistance in the previous week.

The price action has developed a potential reversal pattern, so EUR/USD could drop in the short term if the USDX will continue to increase. The USD has managed to take the lead again after the latest US data and after the FOMC Meeting.

The FED has maintained the Federal Funds Rate unchanged, at 0.25%, sustaining that they will use all tools to help the US economy to recover after the COVID-19 crisis. The dollar has received a helping hand from the Prelim UoM Consumer Confidence on Friday, the economic indicator has increased from 72.3 to 78.9 points, beating the 75.0 estimates.

The USD has rallied versus its rivals in the short term as the US Dollar Index has registered only a false breakdown below the 96.00 psychological level and now is trading around the 97.15 level.

USDX has found temporary resistance at the S1 (97.36) level, it has decreased a little today, but Thursday‘s bullish engulfing pattern has announced a potential reversal on the Daily chart. It is still premature to talk about a larger increase on the USDX as long as the price is traded within the descending pitchfork’s body, below the upper median line (UML).

Still, the failure to approach and reach the median line (ML) has signaled an oversold and a potential rally towards the upper median line (UML) of the descending pitchfork. You should know that EUR/USD drops when the USDX grows, so a USDXs further increase towards the upper median line (UML) will force the EUR/USD pair to drop towards the 1.1 again.

EUR/USD has registered only a false breakout above the upper median line (UML) of the descending pitchfork and also above the R1 (1.1381) static resistance and now is trading below the weekly Pivot Point (1.1296).

The failure to stabilize above the upper median line (UML) has signaled that the upside movement could be finished and that the EUR/USD could develop another bearish movement. The S1 (1.1171), S2 (1.1086), and the S3 (1.0961) levels could be used as downside targets if the quote will stabilize below the upper median line (UML).

Technically, only a valid breakout above the upper median line (UML) will validate a further increase, another higher high, valid breakout above 1.1422, will suggest a broader upside movement. EUR/USD will be under some bearish pressure as long as it stays below the UML, it could drop in the short term if it will confirm another lower low (close and stabilize below the 1.1240 level).

The 1.1000 psychological level and the median line (ML) could attract the price in the short term if the pair will be traded within the descending pitchforks body.

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