EURUSD is trending higher inside an ascending channel on its 1-hour chart and is bouncing off support. If this continues to hold as a floor, price could aim for the Fibonacci extension levels next.
In particular, the 38.2% level lines up with the mid-channel area of interest at 1.1536. Stronger bullish momentum could take EURUSD up to the 61.8% extension at 1.1568 or the 78.6% level at the top of the channel. The full extension is at the 1.1620 area.
The 100 SMA is safely above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to resume than to reverse. The gap between the moving averages is widening to signal strengthening bullish momentum.
The 100 SMA is holding as dynamic support as well. A larger dip from the channel could find support at the 200 SMA dynamic inflection point at the 1.1450 minor psychological mark. RSI is still pointing down to signal that there’s some selling pressure left and that another dip may be in order.
Stochastic is moving up but closing in on the overbought zone to signal exhaustion among buyers. Turning back down could bring a return in selling pressure and possibly a break below the channel bottom or swing low.
The US dollar is on slightly weaker footing as the FOMC minutes revealed that policymakers could slow their pace of tightening this year. Although some hint of this was already gleaned from Powell’s speech earlier on, the support from most of the committee members added to dollar weakness.
At the same time, the shared currency typically takes advantage of dollar dips and also a slight pickup in risk-taking. The ECB minutes were not on the upbeat end either, but these barely contained any surprises since the downgrades to economic forecasts were already shared during the actual announcement.