A week ago, we wrote about significant changes in the dollar index – the DXY chart was signalling bullish trends. This week has confirmed those assumptions, which is also reflected in EUR/USD: this morning, the pair fell below 1.1660, marking a three-week low.
Trader sentiment is being influenced by:
→ News regarding President Trump’s decision to impose tariffs on pharmaceuticals (and other goods) imported into the US.
→ Expectations for the release of the Core PCE (Personal Consumption Expenditures) Price Index, scheduled for 15:30 GMT+3 – the data may provide important guidance on the inflation outlook and potential US interest rate cuts.
EUR/USD Technical Analysis
EUR/USD fluctuations over the past few months have formed an ascending channel (shown in blue), providing an important context for interpreting price dynamics.
From a bullish perspective:
→ The price is near a key support line – the lower boundary of the channel;
→ The recent dip below the 11 September low (1.1660) can be viewed as a bullish Liquidity Grab pattern;
→ The RSI indicator has fallen into oversold territory.
From a bearish perspective, mid-September saw important reversal signals:
→ The median of the ascending channel acted as resistance;
→ The break above July’s high was short-lived (potentially trapping buyers) – a sign of a false breakout;
→ A long upper wick on candle A of the EUR/USD chart indicated seller aggression.
A logical continuation of these signals has been the formation of a series of lower highs and lows A→B→C→D, with:
→ Each recovery reaching roughly 50% of the preceding downward impulse;
→ Note (as shown by the arrow) that the bounce from 1.7250 was extremely weak (resembling a Dead Cat Bounce pattern), confirming rising selling pressure.
Given the above, it is reasonable to suggest that the lower boundary of the multi-month channel may act as strong support for EUR/USD. However, clear seller initiative increases the likelihood of a bearish breakout. Whether this occurs today will depend on the market’s reaction to the PCE index release.
