EURUSD has been forming higher lows and higher highs, connected by a fresh rising channel seen on its hourly time frame. Price is retreating from the channel top and might be in for a test of support marked by the Fib retracement levels.

The 38.2% Fib is at 1.0830 near the 100 SMA dynamic support while the 50% Fib is closer to the channel bottom at 1.0809. The line in the sand for a bullish correction might be the 61.8% level near the 200 SMA at 1.0789.

The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that the rally is more likely to resume than to reverse. The gap between the indicators is widening to reflect strengthening bullish momentum that could take EURUSD back to the swing high at 1.o896 or higher.

Stochastic is moving down for now to confirm that the correction could keep going on until sellers are exhausted. The oscillator is inching closer to the oversold area, so turning higher might signal that the uptrend is bound to resume.

RSI is also heading south, so price could keep following suit while bearish pressure is in play.

EURUSD drew support from weak US data for the most part of the week, as the PPI, CPI, retail sales, and manufacturing indices pointed to weak spots. All in all, these kept investors hopeful that the Fed can pursue its easing plans later in the year, leading to lower US borrowing costs.

However, FOMC officials talked of the need to keep interest rates higher for longer, leading the dollar to regain a bit of lost ground.

On other hand, the euro was also able to find some buyers on strong business sentiment data, although a June ECB rate cut appears to be priced in.