EURUSD has formed higher lows and higher highs connected by an ascending trend channel that’s been holding since mid-April. Price just retreated from its channel top and is testing the mid-channel area of interest.

This lines up with the 38.2% Fibonacci retracement level and 100 SMA dynamic inflection point that add to its strength as support. The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse.

A larger correction could still reach the 50% Fib at 1.0808 near the 200 SMA dynamic support and 1.0800 major psychological mark. The 61.8% Fib is at 1.0775 and might also attract buyers, although the line in the sand for a bullish correction could be the channel bottom closer to 1.0725.

Stochastic is already heading higher to show that buying momentum is in play, and the oscillator has room to climb before reflecting overbought conditions or exhaustion among buyers. RSI has more ground to cover on its move up, so EURUSD could keep following suit while bullish pressure is present, possibly taking the pair to the swing high at the 1.0950 minor psychological mark next.

The US dollar drew support from stronger than expected advance GDP data, as the reading showed a 2.8% expansion versus the projected 2.3% growth figure. Although the price index fell short of estimates, traders seemed to hold on to the “higher for longer” view while waiting for today’s release of the US core PCE price index.

A strong result from the Fed’s preferred inflation measure could confirm that the central bank could afford to delay its easing plans, possibly pushing back on September rate cut hopes and triggering more gains for the dollar.

On the other hand, weak inflation data could revive calls for September easing and spur a fresh round of losses for USD.