EUR/USD upside seems over

EUR/USD rebounded in the short term only because the Dollar Index retreated a little after its amazing rally. Technically, the pair maintains a bearish bias, so a deeper drop is natural after retesting the parity.

The price recovered a little but the bounce seems over after the US economic data. The Prelim GDP dropped by 0.6% which is less than expected compared to the prediction of 0.7%. The Unemployment Claims came in at 243K below 250K estimates. In addition, the Prelim GDP Price Index surged by 8.9% beating the forecast of 8.7%. Tomorrow, the Core PCE Price Index and Fed Chair Powell's Speech could shake the markets.

The EUR/USD pair tested and retested the downtrend line which represents an upside obstacle. As you can see on the H1 chart, the rate registered only false breakouts and now it has turned to the downside again.

The price has challenged the weekly S1 of 0.9960. Taking out this static support could open the door for a deeper drop towards the 0.9899 key downside obstacle.

In the short term, EUR/USD is traped between 1.0018 and 0.9899. Staying below the downtrend line and making a new lower low, a valid breakdown below 0.9899, could activate more declines and could bring new short opportunities.