EUR/USD bearish scenario intact

EUR/USD recovered a little in the short term only because the Dollar Index has retreated. The bias remains bearish, so a further drop is natural. Importantly, the DXY maintains a bullish bias, and upside continuation may signal that the USD could take the lead again.

The currency pair was falling at the time of writing, traded at the 1.1209 level. Fundamentally, the german Final GDP registered a 1.7% growth versus 1.8% expected and versus 1.8% in the previous reporting period. Also, the German Gfk Consumer Climate dropped unexpectedly lower from 1.0 to -1.6.

EUR/USD has retested the Descending Pitchfork's lower median line (LML) which represents a dynamic resistance. As long as it stays within the down channel's body, below the downtrend line, it could signal a potential further drop.

The weekly S1 at 1.1199 stands as a downside obstacle. In the short term, the price action signaled that the sellers could be exhausted after the price failed to approch and reach the channel's downside line. A new lower low, a bearish closure below 1.1186 could open the door for a larger drop.

The EUR/USD pair could extend its downside movement as long as it stays under the Descending Pitchfork's lower median line (LML) and under the downtrend line. Dropping, closing, and stabilizing below the 1.1199 could validate a potential deeper drop.