Is the EUR/USD ready for further declines?

The long-awaited NFP report turned out to be a disappointment to many investors who were looking forward to September's results with high expectations. Markets ended up reacting to periods of high volatility and the foreign exchange market was no exception, although the main currency pair continued to trade in a stable manner.

Let's take a closer look at the current situation of the EUR/USD pair.

Technical Analysis - Daily Chart.

Since sellers managed to break below the support zone marked at 1.1700, the bearish movement has intensified in the EUR/USD pair.

However, in the short term it is possible to see that the pair has been consolidating for several days.

EUR/USD, Daily chart. Source: xStation 5

In the 1 hour time frame chart, it is possible to see that the highs have been getting lower and lower.

Right now, and despite the price being trading laterally, we can identify a bullish channel in which it could justify a continuation of the bearish movement.

Therefore, there are two fundamentals that could keep the current downtrend valid.

The upper boundary of the structure that coincides with the Fibonacci levels at 61.8% and the lower boundary of the structure (channel) once it is broken.

On the other hand, if buyers breach above the upper bound of the channel, the bearish scenario could be void.

EUR/USD, 1 hour time frame chart. Source: xStation 5

US dollar Index (USDIDX)

Looking at the US Dollar Index, the 4-hour chart, we can see that there is still some indecision in the index.

There is a graphical structure that continues to support the possibility of bearish USD, however, the price has been consolidating since testing the upper bound of the rising wedge.

The bearish scenario could be void once buyers break above the structure.

USDIDX, Daily time frame chart. Source: xStation 5

During this session, the AUD leads the gains during today's session

Source: currency-strength.com

Henrique Tomé, XTB Portugal