by FXOpen on April 5th, 2019

EUR/USD outlook: the downward channel is broken, but the direction is not defined

The EUR/USD pair went lower yesterday after the release of data in Germany which showed that industrial orders in February fell at a maximum rate in the last two years. Contracts for German goods fell by 4.2%, data from the Ministry of Economy showed on Thursday. This is up from a 2.1% fall in January. The unexpected fall was the sharpest since January 2017 and cast doubt on the growth forecasts. The leading economic institutions of Germany on Thursday cut their growth forecasts for 2019 by more than half.

EUR/USD Technical Analysis

The Euro climbed higher recently after trading as low as 1.1183 against the US Dollar. The EUR/USD pair traded above the 1.1220 level, but it faced a strong resistance near the 1.1255 level.

As a result, there was a sharp decline below the 1.1230 level and the 50 hourly simple moving average. The pair even broke the 50% Fib retracement level of the last wave from the 1.1183 low to 1.1254 high.

It tested the 1.1210 support area and it is currently recovering higher. However, it seems like there is a bearish flag pattern forming with support at 1.1220.

If there is a break below the 1.1220 support, there is a risk of more losses below the 1.1200 support in the near term. On the other hand, buyers need to push the price above the 1.1230 level and the 50 hourly SMA to revisit the 1.1255 level.

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