Notably, panic has started to spread through the financial markets after Chinese export growth slowed sharply last month, as the world’s second-biggest economy was hit by coronavirus lockdowns and weakening global demand.
It appears that the bad Chinese export data was the straw that broke the camel’s back in terms of markets sentiment as Chinese exports recording the slowest rate in two years.
More worrying still is that the official data showed as supply chains were choked by unpredictable and ambiguous Covid-19 rules and higher inflation sapped consumer spending in Europe and the US.
Something that is still worrying me equally or even more right now right now is that traders are not bearish towards the EURUSD at all. Sentiment is rising while the EURUSD pair looks like it’s going to drop.
The ActivTrader Market Sentiment tool shows that some 75 percent of traders are bullish towards the EURUSD. This is a near 15 percent increase since last week. This is a huge red flag for more losses.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the EURUSD pair has been following a similar pattern to the higher time frames and is starting to form a reasonable sized bearish pattern.
Interestingly, the target of the latest head and shoulders pattern appears to be the 1.002 level. If we see the 1.0470 support level broken this week, watch out for a big crash.
EURUSD Medium-Term Technical Analysis
Looking at the daily time frame things looks very bad for the EURUSD pair has now broken convincingly under the 2020 swing low, just or slightly above the 1.0500 level.
If the EURUSD pair continues to drop, and moves under the 1.0400 area this week, then watch for an attack towards the 1.0200 region or even below parity and the 0.9800 level.