The EUR/USD currency pair has shown signs of volatility, easing from recent highs due to fresh trade war headlines. As of late Tuesday, the pair retreated from a peak of 1.0947, settling around the 1.0900 mark just before the opening of Wall Street. This movement comes amidst a complex technical landscape, with the pair developing above a bullish 20 Simple Moving Average (SMA) in the 4-hour chart, suggesting potential for further directional shifts.
On the technical front, the 4-hour chart reveals that the EUR/USD is trading above a bullish 20 SMA. This moving average has advanced beyond both the 100 and 200 SMAs, which are also bullish. Such a setup indicates a strong upward momentum despite recent fluctuations. However, the daily chart paints a different picture, showing that the pair might face a corrective decline due to overbought conditions. This suggests that while short-term trends are positive, caution is warranted as potential corrections loom.
Support and resistance levels play a crucial role in understanding potential price movements. For the EUR/USD pair, support levels are identified at 1.0885, 1.0830, and 1.0790. These levels offer a cushion against further declines if selling pressure increases. Conversely, resistance levels are marked at 1.0925, 1.0960, and 1.1000, providing targets for potential upward moves. The technical indicators suggest a mix of opportunities and challenges for traders navigating this uncertain landscape.
The bullish outlook is further reinforced by the positioning of the 20 SMA relative to the other moving averages. The 20 SMA is firmly bullish as it advances beyond a flat 100 SMA. Meanwhile, the 200 SMA remains significantly below the current price level, which limits the bearish potential for the pair and implies that any downside risks may be contained within this framework.
Despite these technical indicators suggesting an overall bullish sentiment in the short term, external factors continue to exert influence over the EUR/USD pair's trajectory. The recent retreat from its late Tuesday high was driven by new trade war developments, underscoring how geopolitical tensions can swiftly impact market dynamics. As these headlines emerge, they bring about uncertainty and caution among traders, contributing to the pair's recent fluctuations.