EURUSD is starting to trend higher as it moves inside a rising channel on its hourly chart. Price is bouncing off support and might be setting its sights on the bullish targets marked by the Fibonacci extension tool.

The 38.2% level is at the mid-channel area of interest around the 1.2160 level then the 61.8% level lines up with the swing high at 1.2185. The 76.4% level is closer to the channel top at the 1.2200 major psychological mark then the full extension is at 1.2230.

The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that the climb is likely to gain traction. Price appears to have found some support at the 200 SMA dynamic inflection point but is still trading below the 100 SMA dynamic resistance.

Stochastic is on the move up to indicate that there is some bullish momentum left in play, but the oscillator is nearing the overbought zone to reflect exhaustion. Turning lower could mean that sellers are about to take over. RSI has more room to climb, suggesting that buyers could stay in control for much longer.

The main event risk for this pair this week is the US advance GDP release, as the economy is expected to show a 4.2% growth figure. Although this pales in comparison to the earlier GDP reading, note that the Q3 GDP was mostly a rebound from the back-to-back economic contractions in the first part of 2020.

The FOMC decision might also bring some volatility, even though no actual monetary policy changes are expected. Some expect more optimistic remarks from Powell when it comes to working with the Biden administration, which includes former Fed head Yellen as Treasury Secretary.

If that’s the case, the dollar could see more upside versus the euro, as the European region continues to reel from the new strain of the virus.