EURUSD had a strong rally recently but price is currently stuck in a tight consolidation pattern. This appears to be a bullish flag, which is considered a continuation signal. A break past the resistance at the 1.1385 level could be enough to confirm that further gains are in the cards.
Note that the mast of the flag is approximately 100 pips tall so the resulting rally could last by the same number of pips, taking EURUSD up to the 1.1485-1.1500 handle. The 100 SMA is above the 200 SMA so the path of least resistance is to the upside, and the gap between the moving averages is widening to indicate stronger bullish pressure.
Stochastic is on the move up but is already in the overbought area, signaling that bullish pressure could weaken soon. RSI is on middle ground, barely providing any strong directional clues at the moment. A break lower and a return in selling pressure could lead to a drop to the 1.1300 support level.
There have been no major reports out of the euro zone and the US recently, as dollar traders are likely waiting for more confirmation that the Fed won’t hike rates this month or the next. Economic data from the US has been stronger than expected yesterday, as the non-farm productivity and unit labor costs data were upgraded.
As for the euro, the region’s GDP enjoyed an upward revision from 0.5% to 0.6% to keep the shared currency supported. There are no major reports lined up from the euro zone and the US today. Keep in mind also that Brexit-related updates have been pushing the euro around as well, with polls favoring the “stay” vote likely to keep the currency afloat.
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Kate has been a technical analysis covering forex for many years. She our daily forex outlook and works in the New York office of Forex.Today