The actual data on US unemployment claims discouraged investors. Following the report, the US dollar extended its weakness. On the plus side, the number of initial jobless claims contracted by 8K last week instead of a 3K increase.
On the minus side, the number of continuing claims rose by 31K, confronting expectations of a 7K decline. The continuing claims gave investors a negative impression which pushed the US dollar down.
Today the economic calendar is empty. As there are no market catalysts, market participants make decisions, bearing in mind that the euro is overbought. Notably, the single European currency has advanced by almost 400 pips over the last two weeks. The market needs a correction. Therefore, the empty economic calendar could be an excellent background for a corrective move.
Having rebounded from support at 1.0636, EUR/USD extended its upward correction. As a result, traders added more long positions that made the price climb above a local one-week high.
The H4 RSI technical instrument approached the overbought area. It indicates that long positions are overheated. The D1 RSI is moving in the upper area of 50/70, which is a signal of an extended correction.
The H4 Alligator signals an upward move as the moving averages are directed upward. The D1 Alligator has changed its direction from downward to upward. It also indicates a further upward correction.
Outlook and Trading Tips
The euro has strengthened by more than 400 pips over the last two weeks. However, the rally could slow down in the short term so that traders might revise sentiment. The buyers are facing resistance at 1.0800/1.0850.
Complex indicator analysis suggests buying EUR/USD intraday and on the back of the ongoing upward correction in the short term. In the medium term, indicators have partly changed their signals from selling to buying due to the protracted correction.
