The EUR/USD has been very choppy this week. After falling to 1.0520 to start the week, it rebounded after disappointing US inflation and retail sales data. On Wednesday, the ECB held its overnight lending rate at the historic low of 0.05%, and is maintaining course with QE. This however was not the main catalyst for Wednesday’s price action. The US-data story is dominating as the USD fell across the board again after poor manufacturing numbers.
The 1H chart shows this week’s choppy price action and the various fundamental factors over the past few sessions.Essentially, the pair is in a bullish correction. As we enter the 4/16 session, price is starting to pick up bullish momentum, at least in the 1H chart.
!) After a break above the 100-, and 50-hour SMAs, EUR/USD just used them as support.
2) The RSI has been holding above 40 after tagging 70, which reflects maintenance of the bullish momentum.
3) Note the rising lows in the RSI. This reflects weakness of bearish momentum, and I am noting this because if the RSI falls below 40 for example, it will break this pattern as well as signal a loss of the prevailing bullish momentum this week.
Otherwise, the currently choppy consolidation looks like it has another leg to go heading in the 4/16 US session. Take a look at the 4H chart.
In the 4H chart we can see a market that was in consolidation, but seemed to have revived the bearish mode last week when price fell below 1.07 and when the RSI fell below 30. Also note that price came back under the cluster of 200-, 100-, and 50-period SMAs.
Today, price is challenging the cluster of SMAs, and the RSI is approaching 60. Now, if price can hold under 1.08 and dips back below 1.07, we can still say that it respects the SMAs as resistance. Plus, 1.08 is a key support/resistance pivot. Now, the 4H RSI might breach 60, but if it comes right back within this session or the next, we can still say that the bearish momentum is maintained.
Above 1.08 however, we need to hold off on the bearish outlook, and look for a test of the 1.1040-1.1052 resistance are.
Previous Post by Author: USD/CAD Completes a Price Top after a Less Dovish BoC