Original article source: Technical Analysis: The EUR/USD Has Rebounded From the Low – Futunn
Author: Futunn News Team
Rewritten and expanded analysis (credited to original author):
EUR/USD Technical Analysis: Bullish Rebound Signals Short-Term Recovery
By Futunn News Team
The EUR/USD currency pair, which reflects the exchange rate between the euro and the US dollar, has recently shown signs of recovery after hitting recent lows. According to a detailed technical analysis from Futunn, there are multiple indicators implying a potential upward trajectory in the short term. However, caution remains as broader macroeconomic factors weigh on the market. In this article, we deepen the analysis provided in the original report and further examine the key technical developments influencing the EUR/USD movement.
Background: Recent Market Dynamics
The EUR/USD has seen significant volatility over recent weeks, influenced by multiple factors including:
– Divergence between the monetary policy of the European Central Bank (ECB) and the US Federal Reserve.
– Uncertainty around inflation data on both sides of the Atlantic.
– Geopolitical tensions and global risk sentiment.
– Shifting expectations regarding interest rate hikes and economic growth prospects.
On the back of these elements, EUR/USD hit a lower support point before initiating a rebound. This movement caught the attention of market analysts, suggesting that the pair may be entering a new phase of consolidation or recovery.
Key Technical Levels Monitored
The rebound from the recent low was not unexpected for analysts tracking historical support and resistance zones. The technical chart points to several levels worth monitoring:
– Support near 1.0700: The pair bounced after approaching this critical zone.
– Resistance at 1.0820: This is the immediate resistance level and a short-term target for bulls.
– Further resistance at 1.0900: A psychological level and previous zone of congestion.
– 50-day Moving Average near 1.0850: Potential cap to the upside unless buyers gain momentum.
Chart Patterns and Trendlines
Recent chart patterns have played an essential role in deciphering the next possible direction for the EUR/USD. The pair’s movement suggests the formation of a minor bottom, possibly indicating exhaustion of the previous downtrend.
Key observations:
– Reversal from a lower boundary support channel.
– Development of a bullish engulfing candlestick pattern on the daily timeframe, signaling changing sentiment.
– Trendline breaks are being tested, and confirmation is awaited on higher time frames.
Relative Strength Index (RSI) and Momentum Indicators
Indicators like RSI and momentum oscillators are frequently used to gauge the strength of the current trend and identify possible reversal or continuation points.
– RSI has moved above 40 after dipping closer to oversold levels, indicating a gradual pickup in buying pressure.
– Momentum indicators show early signs of reversal, aligning with the recovery from support zones.
– The MACD (Moving Average Convergence Divergence) is close to crossing the signal line from below, which could further confirm bullish traction in coming sessions.
Bulls vs. Bears: Sentiment Overview
In the short term, bullish sentiment appears to be building, primarily from technical signals. However, the larger picture remains uncertain.
Bullish Indicators:
– Clear rebound from support zone near the 1.0700 level.
– Bullish candlestick structure with increased volume.
– RSI recovery showing decreasing selling pressure.
– Potential bullish divergence on lower time frame MACD charts.
Bearish Risks:
– Overall downtrend remains intact until confirmed breakout above significant resistance.
– Interest rate expectations remain tilted in favor of the USD due to continued Fed hawkishness.
– Any resurgence in US macroeconomic data strength could push EUR/USD back down.
Fibonacci Retracement Levels
Using Fibonacci retracement from the previous high to the recent low provides insight into potential resistance points for this rally to meet friction. Key retracement levels include:
– 38.2% level near 1.0800: Already being challenged.
– 50.0% level at 1.085
Read more on EUR/USD trading.