EUR/USD is testing the top of its downtrend pattern!
Will we see an upside breakout this week?
A quick look at the forex calendar tells us that traders are expecting tomorrow’s Euro Area manufacturing and services PMIs to reflect slight improvements from January to February.
Of course, EUR/USD’s levels after the PMI releases will partly depend on its reaction to the FOMC meeting minutes coming up today at 7:00 pm GMT.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. dollar and the euro, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
EUR/USD 4-hour Forex Chart by TradingView
If today’s FOMC meeting minutes result in increased USD demand, then EUR/USD could extend its downtrend. As you can see, the pair is already testing the R1 (1.0820) Pivot Point that’s conveniently close to the 1.0800 psychological handle and the top of a descending channel pattern.
A fresh round of USD-buying may attract enough EUR/USD sellers to drag the pair back to the 1.0760 Pivot Point and mid-channel zone. We may even see EUR/USD return to its February lows if there’s enough momentum!
On the other hand, the markets could focus on the Euro Area’s potentially improved business conditions in February. If today’s headlines extend EUR/USD’s week-long upswing, then EUR bulls could make plays for an upside trend breakout.
Watch out for consistent trading above the 1.0800 zone or even the 200 SMA near the 1.0850. A technical breakout combined with a bullish catalyst just might bump EUR/USD up to the 1.1000 area.
Good luck and good trading this one!