EUR/USD at Risk of Deepening Losses; Head-and-Shoulders Top Signals 1.1000 Test
Technical Analysis:
EUR/USD fell sharply to an 11-session low at 1.1266 on Thursday, pressured by robust U.S. dollar demand following the stronger-than-expected employment component in the April ISM manufacturing report. The pair had initially rallied to 1.1341 early in New York, benefiting briefly from rising U.S. weekly jobless claims. However, sellers quickly regained control as improving U.S. data boosted yields and the dollar, ultimately pushing EUR/USD below critical intraday supports to close near 1.1280, down 0.41% on the day.
From a technical perspective, the daily chart is developing a distinct head-and-shoulders top formation, significantly raising downside risks for EUR/USD bulls. The neckline of this bearish reversal pattern is situated clearly in the 1.1260–1.1270 zone, aligning closely with the 21-day moving average, which offered temporary support on Thursday. A confirmed daily close below this neckline would trigger completion of the bearish formation, targeting a measured move toward the 1.0950–1.1000 support zone, representing the next major structural support area and aligning with the February–March consolidation base.
Momentum indicators corroborate this bearish outlook, with daily RSI turning sharply lower and pointing toward further short-term downside. Bulls require a quick recovery above 1.1340–1.1360 to invalidate the immediate bearish bias and regain upside momentum. Traders will closely watch Friday’s U.S. April non-farm payrolls report as a potential catalyst. Stronger-than-expected employment data could further boost U.S. yields and extend dollar gains, significantly amplifying downside pressure on EUR/USD and accelerating declines toward key lower targets.