Even though EURUSD edged lower for the past weeks, the uptrend on its 4-hour chart remains intact. In fact, a rising trend line can be drawn to connect the recent lows of price action and another pullback is in the cards.
Applying the Fib tool on the latest swing high and low shows that the 61.8% level lines up with the rising support level and the 200 SMA. For now, price is finding support at the 50% Fib and the 100 SMA dynamic inflection point.
Speaking of moving averages, the 100 SMA is safely above the longer-term 200 SMA, confirming that the path of least resistance is to the upside and that the rally could resume at some point. If a deeper correction is needed, EURUSD could draw support around 1.1035 at the lowest Fib.
A break below this area, however, could set off a longer-term downtrend for EURUSD. Price could head back to test the next floor at the 1.0900 major psychological mark then onto the lows near 1.0500.
Stochastic is on the move up, which means that buyers are still in the game. However, this oscillator is already near the overbought level so sellers could take control. On the other hand, RSI is on the move up from the oversold region, indicating a buildup in buying pressure, enough to take EURUSD back to the previous highs at 1.1375.
Stronger bullish pressure could even lead to a break past the 1.1400 major psychological mark onto the 1.1500 area. This might depend on the outcome of today’s batch of flash PMI readings due from Germany and France, as any improvements in their manufacturing and services sectors could be positive for the entire region.
As for the US, only the flash manufacturing PMI is due today and a small drop is eyed.
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