Despite the lack of some news and an empty macroeconomic calendar, the euro has dropped sharply. To some extent, it was due to a protracted period of stagnation in the previous week.
It does not mean that the euro was flat all the time. However, its fluctuations were tiny, and all the attempts to rise higher were unsuccessful as the currency always returned to its previous values.
The market cannot stay at a standstill for so long. Which is why it has turned bearish ahead of the European Central Bank’s (ECB) monetary policy meeting.
With a weaker euro, investors are wary that the European regulator would not even hint at the possibility of changes in its monetary policy.
In the wake of the US Federal Reserve’s decision to begin QE tapering, the stance taken by the ECB does not look good. Therefore, it is clear why investors are openly skeptical about the euro.
Today, this currency may well remain bearish as it is likely to face pressure after releasing macroeconomic data in the United States.
The house price index in the US is estimated to rise to 20.1% from 19.9%. At the same time, new home sales are forecast to increase by 1.0%.
As we can see, house prices are growing along with home sales, which is beneficial for investors.
EUR/USD - Technical Outlook
The formation of the 1.1620/1.1669 sideways channel was completed after EUR/USD broke through its lower boundary, boosting speculative trading in the market.
The 23.6 Fibonacci line has been broken together with the support level of 1.1620, indicating the end of the flat stage.
The Relative Strength Index (RSI) is moving near the lower levels on the H4 chart, signaling a downward trend.
There is a downward trend on the daily chart with a corrective move from the pivot point of 1.1524 in its structure.
Outlook
Against this backdrop, traders expect a breakout and then a pullback to occur. Resistance is at 1.1620 for the pair, and short positions could increase as it makes it's way down. Consolidation below 1.1590 will generate a buy signal.
In terms of complex indicator analysis, technical indicators are signaling to sell the instrument for short-term and intraday due to a breakout of the lower boundary of the sideways corridor.