The EUR/USD currency pair shows strong upward momentum, indicating an uptrend on the 4-hour chart. With the latest traded price at 1.16617, the pair has been testing resistance levels, specifically the 1.16774 area, a recent swing high. This resistance level, currently being challenged, acts as a critical point for traders eyeing continuation. Support levels are positioned at 1.15807, where the 50 SMA provides additional support, and 1.15367, which aligns with a recent swing low. The zone around 1.15868 also transforms into a supportive region, previously a minor resistance.
The technical indicators show a strong bullish momentum with a sequence of higher highs and higher lows. This pattern insinuates continuation, although there aren’t any classical formations such as flag or wedge patterns visible at this moment. The series of consecutive bullish candles reflect ongoing strength, as the RSI approaches the 67.80 mark. It suggests a move toward overbought conditions, though not accompanied by any divergence, keeping buyers optimistic.
On the fundamental side, recent signals from ECB officials suggest a careful approach to policy tightening. This stance weighs considerably due to persistent inflation concerns. Additionally, the US dollar faced downward pressure following a softer US CPI release. The inflation figures came in marginally below expectations, rekindling speculation about possible pauses or slowdowns in Federal Reserve rate hikes. Euro sentiment has gained marginally, supported by stronger-than-expected industrial production figures from major economies within the Eurozone.
Combining these insights, the directional bias remains bullish for the EUR/USD pair. After clearing the area between 1.16200 and 1.16300, the pair’s continued movement beyond the crucial 1.16774 resistance corroborates further bullish territory. The ECB’s cautious outlook, coupled with a weaker US inflation report, augments the euro’s potential rise. A definitive break through the 1.16774 resistance could entice more buyers. However, a return or sustained dip below 1.15807 would invalidate this bullish scenario and call for reassessment.
Traders may find a tactical long re-entry viable if the price retests and sustains above the 1.16200-1.16300 zone. Short sellers, however, may face risks if the price maintains levels above 1.16774 amid favorable momentum for buyers. As the market evolves, attention to these key levels will prove critical to traders navigating both rallies and pullbacks. Understanding these dynamics will offer invaluable insights as the EUR/USD continues to test its bullish stride within the existing market landscape.
