EURUSD Short-Term Forex Market Correction

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EURUSD Short-Term Forex Market Correction

EURUSD Short-Term Forex Market CorrectionEURUSD recently pulled up from its sharp dive below the 1.1150 minor psychological level onto the 1.0800 area, creating a corrective wave on its 4-hour forex chart. The Fibonacci retracement tool shows that the 50% level lines up with the broken support level, which might now hold as resistance.

Stochastic is indicating overbought conditions, confirming that a selloff is bound to take place soon. Once that happens, EURUSD could make its way back to its previous lows near 1.0800 or even create new ones if selling pressure is strong enough.

EURUSD Forex Forecast

On the other hand, if buyers stay in control, EURUSD could break past the Fibonacci retracement levels and climb to test the next resistance at the 1.1450 minor psychological handle. Further gains past that point would confirm a longer-term climb for the pair.

For now, the short-term exponential moving average is below the long-term EMA, but it appears that an upward crossover might take place. If so, it would add to confirmation that price is about to head further north.

Event risks for this EURUSD correction setup include the Greek debt talks, as reports have indicated that EU and IMF officials have come up with a reform plan to be implemented by the debt-ridden nation to secure more aid. Other catalysts include the release of the US jobs report on Friday, which might support or counter expectations of a Fed rate hike for September.

The ECB interest rate decision provided an upside catalyst for the pair, allowing it to test the highest Fibonacci retracement levels on the 4-hour and 1-hour charts. These could act as the line in the sand for any correction wave patterns, with an upside break likely to signal a longer-term rally for the pair.

There are no major reports lined up on today’s schedule, which suggests the possibility of consolidation or volatile reactions to any updates on the Greek debt situation.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.