08.12.202111:39 Forex Analysis & Reviews: EUR/USD rallies as DXY drops

The EUR/USD pair bounced back and now is traded at the 1.1293 level. The buyers took the lead again as the Dollar Index plunged forcing the USD to depreciate versus its rivals. Fundamentally, a temporary rebound was somehow expected as the Euro-zone reported positive figures yesterday.

The ZEW Economic Sentiment increased from 25.9 points to 26.8 points even if the traders expected a potential drop to 22.4 points, while the German ZEW Economic Sentiment was reported at 29.9 points above 25.3 expected. Furthermore, the German Industrial Production came in better than expected, while the Euro-zone Final Employment Change and the Revised GDP matched expectations.

On the other hand, the US Trade Balance was reported at -67.1B below -66.9B estimates. The Revised Nonfarm Productivity and the Revised Unit Labor Costs indicators came in better than expected, but the DXY was too overbought to be able to resume its growth.

EUR/USD Strong Rebound!

EUR/USD found support on the weekly S1 (1.1233) and now is traded higher at 1.1286. It has registered only a false breakout through 1.1238 static support, so a temporary rebound was natural.

Still, as long as it stays under the descending pitchfork's median line (ML), the pressure remains high. Technically, it could drop anytime as the median line (ML) stands as a strong upside obstacle. Only jumping and stabilizing above the median line could signal that the major downside movement is over.

EUR/USD Outlook!

The currency pair is trapped between 1.1239 and the weekly pivot point (1.1308). A bearish pattern around the 1.1300 psychological level and below the median line could announce a new downside movement.

Still, after its failure to come back down towards the 1.1186 lower low, EUR/USD is under some upside pressure. Moving sideways in the short term and making a valid breakout above the median line (ML) could signal a broader rebound.