As of the beginning of the American session on Thursday, the EUR/USD currency pair was trading at approximately 1.1650. It was able to cling to some small intraday gains. This stability comes as traders navigate a landscape influenced by a lack of significant macroeconomic data from the United States due to a government shutdown. The lack of important economic indicators has otherwise forced market participants to focus on technical signals, searching for leads.
On the hourly chart, EUR/USD put on an extraordinary display of strength. Previously, it pumped close to the bearish 100 Simple Moving Average (SMA) now placed at 1.1675. On the other hand, the currency pair trades below a capped 20 SMA, which offers resistance at approximately 1.1680. This positioning implies that despite a clear upward bias, EUR/USD is still limited by underlying technical resistance.
In the time since our last analysis, our 20 SMA has managed to keep a bullish slope under EUR/USD’s price action. This positive momentum is being tested by the bearish attitude shown in the 100 SMA. The currency pair has been trapped between these 2 moving averages, a sign of indecision and confusion for traders.
The Momentum indicator for EUR/USD has begun to retreat within negative levels after previously testing its 100 line, suggesting potential weakness in the recovery. The Relative Strength Index (RSI) is registering a mild gain at just below 47. This would imply that upside potential for continued bullish movement is short-lived.
The second chart demonstrates that we have now achieved our second successively higher high and successively higher low. The opportunity for a strong rebound seems dim at best. The technical indicators tell the tale of an asset that has the burden of an external market shaking the confidence required for a spending ascent. Traders must stay on guard though, as the lack of supportive macroeconomic data is a recipe for failure for any bullish extension effort.
EUR/USD has immediate support at 1.1620, then 1.1585 and 1.1540. On the positive side, upside resistance levels are 1.1680, 1.1710, and 1.1745. These levels will be very important for professional traders looking to lay long positions given the uncertainty and tumult underlying this market.
Given the current market dynamics, EUR/USD is clinging to small gains. What happens next will depend a lot on whether it can clear some important technical hurdles and whether market sentiment shifts as new information starts to flow in. Yet the threat of an unprecedented US government shutdown continues to loom over the market. This ambiguity might inform trading strategies over the next few days.