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EUR/USD is set to drop like a rock on the short term, but it remains to see what will happen after the US data is released later today. Some poor figures could weaken the USD again, but you should know that the EUR/USD is bearish and it could resume the downside movement.
Recently, the US dollar was into a corrective phase on the short term as the US economy was hit by the COVID-19 epidemic effects, but as I've said in my previous analysis, the USD is a safe-haven currency and it could appreciate because the demand is high.
The Non-Farm Payrolls indicator is expected to drop in the negative territory, from 273K jobs in February to -100K in March, a deeper drop could weaken the USD. The Unemployment Rate is expected to increase to 3.8%, while the Average Hourly Earnings could increase only by 0.2% in March. The ISM Non-Manufacturing PMI could drop from 57.3 to 43.5 points.
EUR/USD extends it sell-off after the price has invalidated a further increase, you can see that the price has formed a Bearish Harami right on the median line (ML) of the orange descending pitchfork. The price has registered only a false breakout above the median line (ML) and above the 1.1111 static resistance, the aggressive breakdown below the 1.1 psychological level has confirmed that the pair could register a sharp drop.
The next downside target is seen at the 1.0777, while the major support is at the lower median line (LML) of the descending pitchfork. I've said in a previous analysis that EUR/USD will maintain a bearish outlook if it stays below the median line (ML), when the price is rejected by the median line, it should move in the opposite direction, that's why we expect a drop towards the lower median line (LML) again.
You should be very careful today because the US economic data will bring high volatility on this pair, the fundamental factors will drive the price even if we have a clear downside movement. Technically, EUR/USD is bearish as long as it stays below the median line (ML) and below the 1.1000 psychological level.
I really believe that only a valid breakout above the median line (ML) will confirm a reversal, but we cannot talk about it as long as the pair is traded much below this upside obstacle. A minor rebound could give us the chance to go short as well. The 1.0635 former low represents an important target, a failure to reach this level of the lower median line (LML), or only a false breakdown below the LML will signal another leg higher towards the median line (ML).
A valid breakdown (breakdown and stabilization) below the lower median line (LML) will validate a potential drop towards the 1.0461 major static support. Personally, I would like to see a distribution, sideways movement, on the short term before the rate will drop deeper, I really believe that EUR/USD needs more bearish energy to be able to resume the downside movement and to reach fresh new lows.
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