EURUSD has been trending higher within a newly-forming ascending channel pattern, with the pair currently testing key Fibonacci retracement levels that could determine the next directional move.
Price recently pulled back from highs near 1.1776 and is now closing in on potential support around trend correction levels. The Fibonacci retracement tool reveals several key levels where buyers could be waiting to rejoin the uptrend.
The 38.2% Fib level at 1.1719 appears to be providing initial support, while the 50% retracement at 1.1701 coincides closely with the ascending channel’s lower boundary.
A deeper correction could test the 61.8% Fib at 1.1683, which represents a more substantial pullback but could still maintain the overall bullish structure if it holds as a floor.
If any of the Fibonacci levels can successfully contain the current pullback, EURUSD could resume its climb toward the swing high near the channel top around 1.1776 or potentially higher targets.
The moving average structure appears supportive of further upside momentum, with the shorter-term indicators positioned above their longer-term counterparts. This configuration confirms that the path of least resistance remains to the upside, provided the key support zones hold firm.
However, momentum indicators are showing mixed signals. The stochastic oscillator appears to be emerging from oversold territory, which could signal that selling pressure is beginning to wane and buyers may be preparing to return. This development would be consistent with a bullish pullback scenario.
RSI similarly seems to be stabilizing after reaching oversold levels, suggesting that the correction may be nearing completion. A turn higher from current levels would reinforce the likelihood of a continuation toward the channel top.
EURUSD will likely take directional cues from the upcoming ECB decision, as a neutral to hawkish statement could allow the uptrend to resume. On the other hand, a dovish tilt in the statement or presser could drag price below support zones. The US CPI release could also shape USD trends, as a weak print could reinforce Fed easing expectations.