EURUSD has formed higher lows on its daily time frame connected by a rising trend line that’s been holding since March this year. Another test of support seems to be underway.

The Fibonacci retracement tool shows that this lines up with the 61.8% level and former resistance zone around the 1.0900 major psychological mark. This also coincides with the 100 SMA dynamic support which adds to its strength as a floor.

If this is enough to keep losses in check, EURUSD could resume the climb to the swing high at 1.1271 or higher. The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that support is more likely to hold than to break.

Stochastic is still on the move down and has some room to go before indicating oversold conditions. Once the oscillator turns higher, bullish momentum might return and allow the uptrend to resume.

RSI has more ground to cover before reflecting exhaustion among sellers, so the correction could keep going until the oscillator reaches the oversold region and turns back up. A break below the area of interest could signal that a long-term reversal is underway.

EURUSD would likely take cues from the NFP data due on Friday, as well as leading US jobs indicators lined up throughout the week. Another set of strong jobs numbers could mean stronger odds of more Fed rate hikes in their next meetings, which would be bullish for the dollar.

Note that the ECB recently shifted to a less hawkish stance, causing the euro to slide across the board last week. Mid-tier data has been mostly upbeat but traders are still doubtful that the ECB can go for more tightening moves for the remainder of the year.