EUR/USD downtrend expected to continue
The bearish EUR/USD outlook last week finally bore fruits, after hawkish comments from Fischer and Yellen sent the pair back downwards in a continuation of the trend in place since May.
This is expected to continue, with the creation of lower highs and lower lows crucial. As such, further downside is expected, with price expected to surpass $1.1158 to create a new low. The widening of price action provides us with greater confidence of a continuation lower, given that a tightening wedge pattern would indicate a reversal.
While both the medium and short-term outlook point towards further downside, an hourly close above $1.1193 would provide expectation of a rally to retrace some of Friday’s sell-off. Until that happens, another leg lower looks on the cards.