EUR/USD Rate Reserves Ahead Of May High With NFP Report On Tap

With that said, it remains to be seen if the decline from the January high (1.2350) will turn out to be a correction in the broader trend rather than a change in EUR/USD behavior as the crowding behavior from 2020 resurfaces, but the exchange rate appears to have reversed course ahead of the May high (1.2266) as it extends the series of lower highs and lows from the monthly high (1.2254).

EUR/USD RATE DAILY CHART

Image of EUR/USD rate daily chart

Source: Trading View

  • Keep in mind, EUR/USD established a descending channel following the failed attempt to test the April 2018 high (1.2414), but the decline from the January high (1.2350) may turn out to be a correction in the broader trend rather than a change in market behavior as the exchange rate trades back above the 50-Day SMA (1.2040) to break out of the bearish trend.
  • The Relative Strength Index (RSI) showed a similar dynamic as the oscillator reversed ahead of oversold territory to break out of a downward trend, but need a move above 70 to indicate a further appreciation in EUR/USD like the price action seen in December.
  • The bullish momentum appears to be abating as the RSI pulls back ahead of overbought bought territory, and EUR/USD appears to have reversed course ahead of the May high (1.2266) as it extends the series of lower highs and lows from the monthly high (1.2254).
  • A close below the Fibonacci overlap around 1.2140 (50% retracement) to 1.2170 (78.6% expansion) may push EUR/USD back towards the 1.2080 (78.6% retracement) area, with the next area of interest coming in around 1.2010 (100% expansion).
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