Technical Analysis – EURUSD aims for uptrend extension after FOMC boost
EURUSD advanced to a ten-month high of 1.1032 in the wake of a less hawkish FOMC policy statement late on Wednesday, which telegraphed that monetary tightening is probably having the desired impact on inflation.
The pair mildly trimmed some gains earlier today, edging slightly below the 1.1000 level as the RSI and the stochastics on the four-hour chart flagged overbought conditions.
While a pause can be reasonable after the latest spike, yesterday’s close above the 1.0940 bar, which overlaps with the 50% Fibonacci retracement of the 1.2348-0.9535 downtrend, is feeding optimism that the recovery will probably continue towards the key resistance line from November at 1.1115. Before it reaches that place, some congestion may develop around 1.1050. Should the bulls cross above the trendline, they may next target March’s high of 1.1185.
In case downside pressures persist, the price may revisit the 1.0940 region. The 20- and 50-period exponential moving averages (EMAs), which have been limiting bearish actions since mid-January, are approaching that territory and could prevent a forceful decline below the 1.0900 round level. This is also where the 23.6% Fibonacci retracement of the latest upleg from 1.0480 is located. If the bears dominate, the spotlight will immediately fall on the ascending trendline from November 3 around 1.0850 and the 1.0820 region. Even lower, another support trendline from November 21 could halt the bears near 1.0760.In summary, EURUSD is expected to push for fresh highs in the short term, although some profit-taking is possible following the latest quick rally in the market.
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