On the daily chart below, we can see that the EUR/USD pair is now in a clear downtrend with the price making lower lows and lower highs. The moving averages have also crossed to the downside in a further confirmation that the trend has changed. This whole setup may turn into a major double top with the neckline at 1.0533.
The divergence between the two tops and the MACD makes this pattern even more reliable. At the moment, the price is bouncing from a strong support level at 1.0763, but the downtrend is expected to continue as the market is repricing US interest rates expectations on the more hawkish side.
EURUSD Technical Analysis
On the 4 hour chart below, we can see that the EUR/USD pair was trading within a rising channel rallying into the 1.1033 high and the whole channel was diverging with the MACD. When such divergent channels break out, the price generally comes back down to the bottom of the channel, which is exactly where the price has come to.
We are now seeing a pullback as the market awaits new economic data due to the expectations that if the data remains strong, the Fed will hike again in June. Today, we have the US PMIs on the agenda and good data is likely to strengthen the USD, while bad data should extend the pullback.
On the 1 hour chart below, we can see that the price is now in a mini range between the 50% Fibonacci retracement level at 1.0832 and a support level at 1.0797. On the upside, the swing low at 1.0845 coupled with the 61.8% Fibonacci retracement level makes a strong resistance that the buyers will need to break to target the 1.0904 swing high. On the downside, if the price breaks below the 1.0797 support level the sellers should pile in and extend the fall towards the 1.0750 level. Watch out for the US PMIs today to trade the EUR/USD better.
