Running into resistance
The dollar has given back a decent portion of its recent gains over the last couple of weeks and has now reached some very interesting levels.
The greenback correction has coincided with a hawkish shift from the ECB which has lifted the euro, making the impact on the EURUSD pair all the more significant.
But how much further can it run? It’s now reached a potentially significant area around 1.08 where the top of the steeper descending channel crosses the 50 and 61.8 fibs. A break above here could be very significant and a bullish signal.
Interestingly, the 4-hour chart suggests it’s already struggling. Not long after breaking the 200/233-period SMA for the first time in a few months, momentum indicators are flashing divergences with price action. Has the recovery run out of steam?
A move lower could see a significant test around 1.0650 where the 200/233-period SMA band coincides with early May resistance. A break below this could suggest a continuation of the trend that preceded the recent EURUSD recovery.
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