The EUR/USD pair was dropping like a rock at the time of writing as the Dollar Index has managed to rebound. It was traded at 1.1403 far below 1.1482 today's high. In the short term, it seems unstoppable.
It seems that the USD was too oversold to be able to drop deeper. The DXY reached the 61.8% retracement level and now it has turned to the upside. As you already know, the US Core Retail Sales dropped by 2.3% in December versus 0.2% growth expected, while the Retail Sales fell by 1.9%, whereas traders expected zero growth. The Industrial production, Prelim UoM Consumer Sentiment, and the Capacity Utilization Rate reported worse-than-expected figures as well.
As you can see on the H4 chart, the EUR/USD pair jumped above the Ascending Pitchfork's median line (ML) where it has found resistance. Failing to stay above it, the price signaled that a sell-off could develop.
Now, it challenges the weekly R1 (1.1405) level, a valid breakdown may signal a further drop. The next major downside target is represented by the 1.1374 - 1.1386 area. The Ascending Pitchfork's lower median line, the immediate up-sloping line represents a dynamic support.
After its amazing rally, a temporary decline was somehow expected. Still, the sell-off could end around the 1.1386 - 1.1374 area. Staying above this area, registering only false breakdowns, or developing a strong bullish pattern may announce a new bullish momentum.
A consolidation above this area could bring new long opportunities. On the other hand, dropping and closing below this zone may signal a deeper drop.