EUR/USD continues to be very strong. It remains far above the bullish 20 Simple Moving Average (SMA), just above 1.1560 at present. On Friday, the currency pair trades in consolidation near the week’s highs of 1.1642, reflecting the improved optimism in financial markets. Even after surrendering most of its recent advance, EUR/USD manages to cling to modest gains, trading just under the key 1.1600 level.
The continued consolidation as seen on the daily EUR/USD chart suggests that the pair has established a decidedly upbeat sentiment. Market observers, traders and analysts note that the 4-hour chart technical indicators are noticeably neutralized. This stabilization well above their respective midlines is a positive sign that market forces are reaching a promising balance. The good news—though certainly painful for equity holders—the market had just corrected from extremely overbought conditions. Nonetheless, the longer and simply moving averages for EUR/USD continue to point higher, emphasizing a profound bullish trend.
Market participants will be watching the short to mid-term support and resistance levels as they make their way through these new trading waters. The important support levels for EUR/USD are at 1.1560, 1.1510, and 1.1470. These levels should provide a comfortable safety net in the eventuality that the pair comes under downward pressure. Resistance levels are set at 1.1645, 1.1690, and 1.1730, signifying where future upward movements may face hurdles.
From this technical perspective, the pause in bullish momentum seen in EUR/USD does not yet suggest any meaningful weakness is in store for the currency pair. Financial markets seem more settled on Wednesday, letting traders hold positions without sudden changes. This stability should come as welcome news to investors looking to take advantage of the dollar’s current strength and other long-term trends in the currency market.
Despite the bullish sentiment, the recent price action on EUR/USD has indeed been overall bullish. The consolidation phase implies that participants in the market are anticipating further signals which may cause upward or downward movement. The cross between a longer- and shorter-term moving average indicates bullish momentum. As promising as this technology is, we need to be very careful.
As EUR/USD moves forward, market participants will be vigilant in watching key levels and indicators that can provide insight into future price action. Supply and demand will be very important in determining what happens with the currency pair. One way or the other, it will bust through old resistance lines or reverse back down closer to support.