Bearish Engulfing Clouds Euro Outlook Before PPI

In today’s technical analysis, let’s turn to EUR/USD, a pair that is firmly in the spotlight as we await today’s U.S. inflation data. The release of the producer price index will be the key driver for the dollar and, by extension, for the euro-dollar pair. Until then, traders remain cautious — but the chart is already hinting at weakness.

Looking at the setup, EUR/USD has been trading under pressure. A red downtrend line, drawn from early July, has been dictating the direction. Over the past two days, we saw a false bullish breakout above this line. That breakout, however, quickly lost steam and was denied as price action formed a bearish engulfing pattern (highlighted with a pink mark). This classic reversal candle strongly tilts the sentiment to the downside.

As long as EUR/USD remains below the red downtrend line, the outlook leans bearish. However, we must underline that today’s inflation release will be the decisive factor. The data could either reinforce the technical signals pointing south or invalidate them if the dollar weakens significantly. For now, the chart says negative — the fundamentals will soon confirm or deny it.

Source: https://www.axiory.com/analytics/technical-analysis/bearish-engulfing-clouds-euro-outlook-before-ppi