EUR/USD Perks Up After Impressive Rally
2022.11.07 21:39
experienced its fastest daily rally in two years on Friday, advancing by 2.0% to an intra-day high of 0.9965.
The swift bounce back took place at the bottom of a short-term ascending channel, adding credence to the series of higher highs and higher lows that emerged following the plunge to a 20-year low of 0.9535. The momentum signals are also sending some encouraging signals as the RSI has forcefully returned above its 50 neutral mark and the stochastics have resumed their positive trajectory. However, some caution is warranted as the MACD has yet to climb above its red signal line despite its latest upturn.
Besides, with the price being trapped below parity and the nearby 0.9965 resistance, downside corrections cannot be ruled out. Note that the 50% Fibonacci retracement of the 1.0367–0.9535 downleg is also within this neighborhood. Hence, a decisive close above this region is probably needed for the price to accelerate towards the upper surface of the channel seen around 1.0150, unless the previous high of 1.0092 halts the rally first. If the bulls manage to overcome September’s bar of 1.0917 too, the recovery could strengthen towards the 200-day exponential moving average (EMA) currently near the August top of 1.0367.
In the event sellers dominate, immediate support could again develop within the 0.9853–0.9785 region formed by the 38.2% Fibonacci and the channel’s lower band. If downside pressures press the price below the 23.6% Fibonacci of 0.9730 too, all eyes will turn to the crucial 0.9600–0.9535 floor. A violation of this base could bring the 0.9400 level next into focus.
In brief, EURUSD seems to have the bulls’ back, though some extra effort is needed above 0.9965–1.0000 to generate fresh buying interest.
