The euro currency reversed sharply from the 1.1050 level this week as financial markets start to pay more attention to the prospect of an emergency rate hike from the FED next month.
Without question, next weeks CPI report should be a huge market moving event, and one that could further turbo charge the US dollar, which had a stellar Monday and Tuesday on the foreign exchange market.
If you want to know where the EURUSD pair is going, you often need to look at the US dollar index. The US dollar index looks like its going to easily break 100.00, and storm towards the 103.00 to 105.00 range.
This has huge implications for the EURUSD pair, and if we see a break under the yearly low, and a massive multi-year trendline, close to the 1.0800 level, we could see the EURUSD pair tumbling by over 1,000 points.
The lower time frame technical are very bearish after a major trendline breakout yesterday. Additionally, sentiment has seen a major increase this week.
Sentiment is in favour of more downwards trading this week. The ActivTrader market sentiment tool shows that some 88 percent of traders are currently bullish towards the EURUSD pair.
However, I think that we probably need to see EURUSD traders turning wholesale negative before the EURUSD pair stops dropping. The 88% bias is very worrying and warning of more huge losses.
EURUSD Short-Term Technical Analysis
The four-hour time frame continues to show that the EURUSD pair broken from a massive broadening expanding triangle pattern, after moving under the 1.1000 level.
According to the four-hour time frame, and the overall size of the mentioned price pattern, the EURUSD pair looks like it is going to collapse towards the 1.0300 level.
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EURUSD Medium-Term Technical Analysis
Looking at the daily time frame, the EURUSD pair has bounced above a key trendline, however, we are seeing a quick reversal from 1.1180 and a coming test of this important trendline.
The 1.0800 level is the line-in-the sand for me this week. A move under this level and we could soon be looking at parity for the EURUSD pair this quarter.
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