EUR/USD is trading with slight gains around 1.1070, as Euro traders await the outcome of Thursday’s European Central Bank (ECB) monetary policy decision. The pair is defending its gains inspired by the Federal Reserve, supported by a three-week-old ascending trend channel.
However, a divergence between the RSI (14) line and the EUR/USD price could challenge buyers before the ECB announcement.
Despite the Euro pair moving higher, the RSI (14) line has been in a descending formation since April 14, indicating that the bullish momentum could be waning. Additionally, the proximity of the pair to the trend channel’s resistance line near 1.1110 increases the likelihood of a pullback.
If a pullback occurs, sellers could target the convergence of the 100-SMA and one-week-old previous resistance line around 1.0995. Furthermore, the bottom line of the ascending trend channel at 1.0950 could also provide support.
However, sellers should remain cautious before attempting to break below the 200-SMA, which currently sits around 1.0925. On the upside, a clearance of the 1.1110 hurdle, which represents the top line of the trend channel, could send the Euro price towards the March 2022 high of around 1.1185.
Overall, Euro bulls are maintaining their grip on the pair, despite potential challenges on the horizon, as traders await the outcome of the upcoming ECB meeting.
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