The corrective rally in the EUR/USD seems to have run out of steam around 1.17 in, but moving average studies indicate the upside could soon gather traction.
As of writing, the currency pair is trading at 1.1690, having struggled to find acceptance above the 1.17 mark in the last three days.
The short-term moving averages have rolled over in favor of the bulls as indicated by the bullish crossover between the 5-day and 10-day moving average (MA). Further, the 50-day MA is all set to cut the 200-day from above this week, confirming a “death cross” – a long-term bearish crossover.
However, it is a lagging indicator as the 50-day MA takes into account nearly three-month-old data and the 200-day MA considers six months old data.
So, by the time the crossover happens, the sell-off has already happened. Thus, the death cross only adds credence to the argument that a corrective rally is overdue.
That said, the Eurozone is not out of the woods yet. Trade war fears could cap upside in the EUR. Also, Italian bonds could take a hit (sending the EUR lower) and tensions between Rome and EU would rise if Italy’s government returns to fiscal profligacy.
As for today, the demand for common currency could be influenced by the Eurozone PMI numbers and Eurozone retail sales release.
EUR/USD Technical Levels
The immediate resistance is seen at 1.1723 (23.6% Fib R of April-May drop), 1.1830 (May 22 high), and 1.1855 (50% Fib R of April-May drop). On the downside, support is lined up at 1.1662 (10-day MA), 1.1618 (June 1 low), and 1.1510 (May 29 low).