The EURUSD currency pair has been led down a slippery slope by traders full of hawkish attitudes and belief in strengthening the Greenback. The pair slid 1.38% in the prior week following Purchasing Manager Index (PMI) reports, which flagged a resilient U.S. economy and the PCE Index, which revealed stubbornly high inflation.
This week, traders will focus on the Eurozone inflation rate due on Thursday, along with U.S. PMI and Labour market reports.
The EURUSD has been steadily trending lower, with bearish momentum picking up to lead price into a breakout below the falling wedge pattern on high volumes. Support and resistance formed at the 1.05326 and 1.06118 levels, respectively.
Following a breakout below the falling wedge pattern, price fell to the 61.8 % Fibonacci Extension Golden Ratio to form support. A bounce from the level may entice bulls into the market with the 1.05724 level, a potential level of interest for those optimistic about the pair.
If bears regain market control, price will likely be dragged towards support. A breakout below the 1.05326 level on high volumes could signal high momentum bearish activity, making the 1.04926 level a possible point of interest.
The Greenback will likely find strength on the back of signs of a resilient U.S. economy. If the U.S. economy points to strength, it will probably restore hawkish behaviour in the market and drag prices lower toward the 1.05326 level.
Sources: Reuters, TradingView