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 EUR/USD 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 EUR/USD recovery.
