EURUSD has been consolidating inside a rising wedge pattern for the past few weeks and is recently showing signs of a breakdown.

Price is trading below the 1.1300 handle and may be in for around 200 pips more in losses, which is the same height as the chart pattern.

Stochastic is pointing down but is already in the oversold region, indicating that sellers might need to take a break. RSI is also indicating oversold conditions, which means that the selloff might pause from here and that a pullback to the broken wedge support might also be possible.

The short-term 100 SMA is still above the 200 SMA, suggesting that the path of least resistance is to the upside. This could mean that EURUSD might still pop back up above the wedge and resume its climb.

Event risks for this trade today include the release of the German and French manufacturing and services PMI. Analysts are expecting to see improvements in the manufacturing sectors while services could see a small downturn. Stronger than expected data could still lead to a rally for EURUSD.

In the US, durable goods orders data are up for release, with the headline figure expected to show a 0.6% drop and the core figure likely to print a 0.6% gain. Also lined up today is a speech by FOMC member Powell, who might give more clues on when the Fed might hike interest rates.

Other potential catalysts include any updates on the Greek debt talks, as the recent emergency meeting failed to come up with a deal for the debt-ridden nation. News that an agreement will be reached could boost EURUSD while the lack of progress could keep the pair in a downtrend.

By Kate Curtis from Trader’s Way