The euro currency fell under parity against the US dollar last week, however, the EURUSD pair has since stage somewhat of technical bounce after moving close to the 0.9950 level.
With the technical and fundamental backdrop worsening for the EURUSD pair it is going to be very difficult for bulls to make their stamp again, especially with the FED expected to hike rates by 100 basis points.
Something we could see is a temporary bounce in the EURUSD pair as traders seem to be expecting that the ECB are about to hike interest rates this month. However, such a move us probably going to be only temporary, and also it is debatable how high a bounce could reach.
What will be key this week is EU Manufacturing data. The PMI data from the Germany will probably have a major impact on the euro currency, given that a downturn in the economy is widely expected.
The problem the EURUSD pair faces now is terrible technicals. A series of bearish price patterns are predicting further heavy losses ahead towards at least the 0.9600 level. The medium-term technicals are even worse.
Something that could be a mild positive right now is bullish sentiment towards the EURUSD. Sentiment is falling while the EURUSD pair starts to correct higher from below parity.
The ActivTrader Market Sentiment tool shows that some 56 percent of traders are bullish towards the EURUSD. This is a 10 percent drop from last week and it is indicator more upside ahead for the euro.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the EURUSD pair has activated a bearish head and shoulders pattern, which has yet to fully play out to the downside just yet.
According to the potential downside target, as measured by the size of the head and shoulders pattern, we could reasonably expect to see the EURUSD pair testing towards the 0.9600 level.
EURUSD Medium-Term Technical Analysis
Looking at the daily time frame things have gone from bad to worse for the EURUSD pair as large head and shoulders pattern has been activated now after the price moved under 1.0350.
Watch out for a further crash below parity, and possible the 0.9000 support level if we continue to see the EURUSD pair trading below 1.0600.