USDX Drives EUR/USD Lower!| Daily Forex Analysis•Olimpiu Tuns

EUR/USD is trading in the red today and it could extend yesterdays bearish candle as the USDX has managed to rebound from the 96.00 critical support. The US data has forced the USD to strike back and to recapture ground versus its major rivals in the short term.

As you already know, the United States economic data has continued to come in better than expected, thats why the greenback has managed to increase, the Retail Sales have increased by 7.5% in June, beating the 5.0% estimate, while the Core Retail Sales rose by 7.3%, more versus the 5.0% forecast.

The Unemployment Claims have decreased from 1310K to 1300K in the previous week, failing to reach the 1250K prediction, but the USD was somehow expected to increase again as the Industrial Production and the Capacity Utilization Rate indicators have reported better than expected figures as well on Wednesday.

EUR/USD is traded 1.1385 level after the failure to close above the 1.1423 former high, the EUR has slipped lower after the ECB. The European Central Bank has left its monetary policy unchanged in yesterdays meeting.

● USDX Bullish Engulfing!

I‘ve said in my previous analysis that only a USDX’s bounce back from the 96.00 level will bring a EUR/USD drop in the short term. The dollar index has rebounded after another false breakdown below the 96.00 psychological level, the bullish engulfing could signal that the index could come back towards the upper median line (UML) again.

Personally, I believe that the next few days are critical because anything could happen as the US Dollar Index is still under massive pressure as long as it is traded below the upper median line (UML) of the major descending pitchfork.

I‘ve drawn a minor black ascending pitchfork to catch a potential upside movement, so the USDX could be bullish in the short term as long as it stays within the minor ascending pitchfork’s body, above the lower median line (lml).

● EUR/USD Rejected By The 150% Fibonacci Line!

EUR/USD is trading lower after the rejection from the 150% Fibonacci line and after the false breakout above the 1.1423 level, now it could come back to pressure the outside sliding line (SL) of the former descending pitchfork.

The 1.1350 level is seen as near-term static support, the last two candles could signal a potential reversal in the short term if the USDX will resume its rebound. Technically, EUR/USD was expected to resume its upside movement after the valid breakout above the upper median line (UML) and after the aggressive breakout above the 1.1350 high and above the sliding line (SL).

The current drop could still be only a temporary one, the Euro-zone Final CPI and Final Core CPI along with the US Housing Starts, Building Permits, and Prelim UoM Consumer Sentiment data could change the sentiment again.

I believe that EUR/USD is still bullish as long as it is traded above the 1.1350 level and above the outside sliding line (SL), a rejection from these levels, false breakdown, could attract more buyers again.

A valid breakout above the 150% Fibonacci line could bring a great long opportunity, the next upside target could be represented by the upper median line (UML) of the major descending pitchfork.

The 1.1494 level is seen as strong static resistance, but a valid breakout above the 150% line and another higher high, a valid breakout above 1.1423 will suggest that the rate will jump above the 1.1494 upside obstacle.

A further upside movement could be invalidated only by a USDXs strong leg higher and if EUR/USD will drop below the 1.1200 psychological level. It is premature to talk about this scenario as long as the currency pair is traded far above this critical support level.

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