Early in the American session, EUR/USD is trading around 1.0420 within the downtrend channel forming since January 20th and showing exhaustion signs. Therefore, if EUR/USD falls below 1.0396, we could expect a technical correction.

The euro managed to fill the gap left during weekend trading and made a strong technical rebound from 1.0180 to 1.0420. Now we expect a technical correction to occur and the euro could resume its bearish cycle.

We expect the euro to fall below the 200 EMA around 1.0390 which will be confirmed as a bearish signal. The first target could be found around the 21 SMA located at 1.0337. Finally, in the medium term, we expect EUR/USD to reach -1/8 of Murray located at 1.0131.

On the contrary, a consolidation below 1.0420 on the H4 chart could suggest a good bullish outlook. So, the instrument could reach 1.0498 and, finally, the 3/8 Murray located at 1.0620.

The Eagle indicator is showing bearish signals. So, it is likely that EUR/USD trades below 1.0420 in the next few days, it will be seen as a signal to sell.