The EURUSD pair has staged a bullish breakout, surging past a key resistance level at 1.08962 and holding above it for over 13 trading hours. This strong move has shifted market focus to whether this former resistance zone can now act as a springboard for further gains or become a new support level.
Adding fuel to the bullish fire, key economic data from the US could provide a tailwind. Economists are forecasting slower growth on both factory orders and JOLTs Job Openings. If the actual data comes in lower than expected, it could further embolden bullish sentiment in the EURUSD market.
Technicals on the 1-hour chart paint a decidedly bullish picture. The Ichimoku cloud indicator flashes bullish with the Kijun sen, Tenkan sen, and Chikou span all positioned above the cloud. Additionally, the EMA 50 sits comfortably above the EMA 200, signifying bullish momentum in the medium to long term.
On the downside, support for the pair has coalesced around a cluster of key levels: 1.0885 (orange rectangle), the EMA 50, EMA 200, and the Ichimoku cloud itself. A decisive break below the cloud, the lowest level of support, could signal a potential bearish reversal and dampen the bullish mood.
However, caution is warranted as some indicators hint at the possibility of a temporary pullback. The RSI indicator has ventured into overbought territory and is now exiting, suggesting a potential pause in the rally as bulls take some profits off the table. Similarly, the MACD histogram has dipped below the signal line, indicating that bullish momentum might be decelerating.
Despite these signs of a potential pause, the overall trend for EURUSD remains bullish. The current pullback could present an attractive re-entry opportunity for long positions, especially if the upcoming US data disappoints and reinforces the bullish narrative.
Actual -4.9B vs Forecast 5.6B vs Previous 2.7B
Actual 0.1% vs Forecast 0.1% vs Previous -0.4%
Forecast 0.7% vs Previous 0.6%
Forecast 8.370M vs Previous 8.488M
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