Article Rewrite: “EUR/USD Is Stretching to New Highs, but Not High Enough”
Based on original analysis by The Investing Live Team
Original Article Link: https://investinglive.com/technical-analysis/eurusd-is-stretching-to-new-highs-but-not-high-enough-20251016/
The euro (EUR) has continued to gain momentum against the U.S. dollar (USD), pushing the EUR/USD currency pair into new territory. Although this push has created fresh highs, the strength behind the bullish movement appears to be fading. Traders and investors are increasingly cautious, with technical indicators signaling potential exhaustion in the uptrend. While some optimism remains that the rally could continue, key resistance zones are looming. These zones could either serve as stepping stones for further upward movement or act as barriers that reverse the trend.
Summary of EUR/USD Price Action
– EUR/USD has achieved a string of higher highs since early October.
– The pair briefly moved above 1.06, indicating strength in euro buying.
– Momentum is gradually slowing as EUR/USD approaches historically significant resistance levels.
– Overall market sentiment remains cautiously optimistic but not strongly conviction-based.
As of the most recent trading sessions, the euro has shown resilience amid mixed U.S. economic data. The dollar, while still considered a safe haven, has lost some appeal as expectations adjust around future interest rate policies from the Federal Reserve.
Technical Analysis Overview
A closer look at EUR/USD’s technical indicators provides more insight into what traders can expect in the short to medium term.
1. Price Levels and Trends
– The EUR/USD recently pushed above the 1.0580 level, recording a temporary break toward the 1.0630 area.
– Despite this short-term bullish momentum, the price failed to decisively hold above 1.0600 at the end of recent sessions.
– The current upward trend is still intact on the 4-hour and daily charts, though the pair appears to be testing its limits.
2. Resistance Zones
Key resistance areas identified include:
– 1.0630–1.0660: Zone of resistance created by price rejections earlier in October.
– 1.0700: A psychological resistance level considered important from a psychological trading perspective.
– 1.0760: Previous market structure highs that could present difficulties for price to surpass unless backed by strong bullish momentum.
3. Support Levels
– 1.0520: Recent minor support created during the ascent through early October.
– 1.0490: A previous resistance-turned-support level.
– 1.0450–1.0460: Price floor established by multiple rejections in early October.
The presence of these support levels suggests a somewhat stable foundation beneath current price action, though deeper retracements are not out of the question if bearish pressure increases.
Momentum and Oscillator Indicators
Several key indicators point to potential exhaustion in the bullish leg:
– Relative Strength Index (RSI)
– On the 4-hour chart, RSI is approaching the 70 threshold.
– A reading near or above 70 typically signals overbought conditions, suggesting the pair may be due for a correction or consolidation.
– Moving Averages
– The 50-day Simple Moving Average (SMA) trend line is gradually curling upward.
– Price action remains above both the 20-day and 50-day SMAs, indicating that bullish momentum has not fully dissipated.
– However, the narrowing spread between shorter-term and longer-term moving averages points toward consolidation.
– MACD (Moving Average Convergence Divergence)
– The MACD line recently crossed above the signal line, indicating upward momentum.
– However, the histogram’s declining height suggests weakening momentum even as the bullish crossover remains intact.
Fundamental Drivers Behind EUR/USD Movement
The euro’s continued advance against the dollar isn’t being driven solely by technical factors. Fundamentally,
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