EURUSD finally broke out of its triangle consolidation pattern visible on longer-term time frames, signaling that the pair is ready for more declines. 

Price gapped down over the weekend and opened below the ascending triangle support.

Stochastic is still moving down, indicating that sellers are still in control of price action. EURUSD could fall by as much as 1,000 pips, which is the same height as the triangle chart pattern. RSI is also moving down, confirming that a long-term downtrend is set to take place.

Also, the 100 SMA is moving below the 200 SMA, indicating that the downtrend will carry on. This could take EURUSD down to the previous lows near the 1.0400 major psychological level or even lower in the months ahead.

Event risks for this trade include any updates on the Greek debt crisis. The ECB declined to expand its emergency fund program to the country, triggering capital controls on banks in the country. The IMF deadline for the next repayment is still set for tomorrow and the odds of the Greek government defaulting on this obligation is high. The Greek parliament is still set to have a bailout referendum on July 15.

Later on in the week, the US will release its NFP report for June before traders take off for the long weekend on the Fourth of July. Strong data could reinforce dollar strength since this could confirm that the Fed will hike rates in September. Note, however, that the shortened trading week could open up profit-taking scenarios on Thursday and lead to volatile moves for this pair.

By Kate Curtis from Trader’s Way