EUR/USD: Potential for Further Decline below 1.0700 - SHORT

The EUR/USD pair continues to demonstrate a bearish bias on the 1-hour chart, as it remains within a downward channel. The next potential target point could be the AB=CD Leg D with an extension at 1.06750. However, in a worst-case scenario, the price may reach the 1.06500 level.

From a fundamental analysis perspective, the Euro weakened during the European session and experienced negative performance against the pound. Among major currencies, the Euro exhibited lagging performance on Monday, failing to break its negative streak against the US Dollar.

On Tuesday, Spain is scheduled to release the preliminary report on May's Consumer Price Index (CPI), providing an initial glimpse into price behavior for the current month. This data holds significant importance for European Central Bank (ECB) officials and market expectations.

The US Dollar displayed mixed results on Monday, influenced by an improvement in risk sentiment. The DXY index recorded a modest gain of less than 0.1%, enabling it to achieve the highest closing level in two months, surpassing 104.20. As expectations shift from a pause at the upcoming Federal Open Market Committee (FOMC) meeting to a 25-basis-point increase, any potential decline in the US Dollar is likely to be limited.

US markets were closed on Monday in observance of Memorial Day, resulting in a relatively quiet trading day. Market participants absorbed the weekend agreement in Washington to suspend the debt limit. However, the legislation still requires approval from Congress, necessitating ongoing attention. Investors also analyzed Friday's US consumer inflation data in anticipation of a busy week filled with economic reports. On Tuesday, the US will release housing data and consumer confidence figures. Key reports later in the week include Thursday's ADP employment report and Friday's Nonfarm Payrolls.

Trade closed: target reached:

Trade active:

In Wednesday's Asian trading session, the EUR/USD currency pair is currently testing the 1.0700 level after retreating from its recent high around 1.0740. This retreat can be attributed to multiple factors, including the discouraging China NBS Manufacturing PMI data and anxiety surrounding the pre-US debt deal vote, which has renewed demand for the US Dollar as a safe-haven currency. Market focus remains on upcoming US and German economic data releases, Federal Reserve speeches, as well as the House vote.

The price movement is aligning with our previous forecast, as it reached the first take profit level based on the AB=CD pattern. Yesterday, it experienced another pullback towards 1.07400, and currently, it appears to be approaching our final take profit target at 1.06500. It is important to note that only after reaching this target can we consider contemplating a new setup for the currency pair.

Trade closed: target reached:

✅ TARGET REACHED