EURUSD has been edging higher since early October after its long-term downtrend ceased at the 20-year low of 0.9535. In the short term, the pair has been trading sideways, with the completion of a golden cross between the 50 and 200-day simple moving averages (SMAs) failing to spark an upside rally.
The momentum indicators currently suggest that bullish forces are in control. Specifically, the RSI is pointing downwards but remains comfortably above its 50-neutral mark, while the stochastic oscillator is ascending near the 80-overbought zone.
To the upside, if buyers manage to push the price higher, initial resistance might be encountered at the recent peak of 1.0735, which is also a six-month high. Conquering this barricade, the bulls could then aim for the May high of 1.0780. Failing to halt there, further advances could come to a halt at the 1.0935 hurdle.
Alternatively, should the pair reverse lower, the recent support of 1.0570 may act as the first line of defence. Should that floor collapse, the spotlight could turn to 1.0442 before the November support of 1.0289 comes under examination. Even lower, the price could descend towards the 1.0222 support zone.
In brief, EURUSD appears to be in a consolidation mode despite the emergence of bullish short-term technical signals. Hence, a break above the 1.0735 ceiling is needed to validate the resumption of its recovery.
