FX.co ★ EUR/USD: confluence area violated, 0.9899 viewed as next obstacle

The EUR/USD pair plunged as the Dollar Index ended its retreat and now it has rallied. The bias remains bearish after failing to activate a larger rebound, so the currency pair is expected to approach and reach new lows.

Today, only FOMC Member Brainard's speech could bring some volatility and action to the EUR/USD pair. As you already know, fundamentally, the US data came in mixed on Friday but Fed Chairman Powell's hawkish remarks at the Jackson Hole Symposium boosted the USD.

EUR/USD Sell-Off!

As you can see on the H1 chart, the price dropped through the confluence area formed at the intersection between the uptrend line with the downtrend line signaling strong pressure. You knew from my previous analysis that a valid breakdown may announce a downside continuation.

In the short term, the price action developed an up-channel pattern. This formation was seen as a bearish continuation.

EUR/USD Outlook!

The 0.9899 former low is seen as the first downside target and downside obstacle. Staying below the downtrend line and making a valid breakdown below 0.9899 could activate more declines. This scenario could bring new short opportunities.