The EUR/USD pair made a strong upward move early on Wednesday, breaching the 1.0700 threshold and reversing losses from the previous day. The pair’s rally comes after consolidating within a symmetrical triangle formation for the past week.
Notably, the bullish signals from the MACD indicator and the positive RSI (14) line, which remains below the overbought territory, support the Euro’s rebound from the triangle’s support line. This suggests that there is potential for further price gains.
Additionally, the diverging interest rate expectations between the European Central Bank (ECB) and the Federal Reserve (Fed) are enticing buyers of the EUR/USD pair.
However, the 200-Hour Moving Average (HMA), 100-HMA, and the upper boundary of the symmetrical triangle at 1.0720 pose a significant challenge for the bullish momentum of EUR/USD.
If the major currency pair manages to sustain strength above 1.0720, there is a possibility of a quick surge towards the high of around 1.0780 witnessed on Friday.
Subsequently, the 1.0800 level may act as a resistance, potentially limiting further gains as EUR/USD approaches the mid-May peak around 1.0910.
On the other hand, a pullback for EUR/USD is unlikely unless the pair drops below the lower boundary of the short-term triangle, which is near 1.0665 at the time of writing.
If the Euro pair remains bearish below 1.0665, the low of 1.0635 from May could serve as the last line of defense for the buyers before the key support levels of 1.0515 and 1.0480, corresponding to the troughs observed in March and January respectively.
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