EURUSD is attempting a recovery from its swing low at 1.1410 after breaking below a descending channel formation, but the pair could be gearing up for a pullback toward nearby Fibonacci retracement levels that coincide with the broken channel and descending trend line resistance.

Price is currently hovering around the 1.1495 area, and the Fibonacci retracement tool drawn from the 1.16708 swing high to this low shows where sellers could be waiting to re-enter the downtrend.

The 38.2% Fib sits at 1.1509, which aligns closely with a nearby horizontal resistance zone. A further bounce could reach the 50% level at 1.1540, while a larger correction could test the 61.8% Fib at 1.15712, which coincides with the descending trend line and the 100 SMA dynamic inflection point.

On the subject of moving averages, the 100 SMA is still below the 200 SMA to confirm that the path of least resistance is to the downside and that the broader selloff could eventually resume. Both moving averages are sloping lower and could act as dynamic resistance on any rebound attempts, adding confluence to the Fibonacci levels overhead.

Stochastic is heading higher from the oversold zone, though, reflecting a return in buying pressure that could sustain the corrective bounce toward the aforementioned resistance levels. The oscillator still has room to climb before reaching the overbought area, so the recovery could have some legs before sellers reassert control.

RSI is also turning higher from its recent lows and has some ground to cover before reaching overbought territory, suggesting that buyers could keep the bounce alive in the near term. However, if price stalls at any of the Fib levels, a reversal back toward the 1.1410 swing low or lower could follow.

EURUSD could take cues from the FOMC decision and ECB statement later in the week, as chatter for an ECB hike is overwhelmed by the region’s stagflation risks.