EUR/USD Resistance Turned Support Zone

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EURUSD recently busted through resistance at the 1.1835 area and reached a high of 1.1895 before retreating. Applying the Fibonacci retracement tool shows where more buyers might be waiting.

The 38.2% level is near the 1.1850 minor psychological support while the 50% level is in line with the former resistance zone at 1.1835. A larger correction could reach the 61.8% Fib at 1.1820 or the 200 SMA dynamic support near the 1.1800 major psychological level.

On the subject of moving averages, the 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support levels are more likely to hold than to break. The gap between the indicators is also widening to reflect strengthening bullish momentum.

Stochastic is heading south to show that sellers have the upper hand, but the oscillator is dipping into the oversold region to reflect exhaustion. Turning back up would signal that buyers are taking over.

RSI is also heading down to show that bears are in control, and this oscillator has more room to slide before indicating oversold conditions.

There are a handful of mid-tier reports lined up from the eurozone today, possibly providing some volatility for this pair. Preliminary GDP readings from Germany, Spain, Italy and France are lined up, along with flash CPI estimates for the region.

Strong readings could allow the climb to resume right away while weaker than expected results could lead to a deeper pullback. Keep in mind that the US economy recently printed weak GDP data, as the expansion only came in at 6.5% versus the 8.5% estimate.

Also the Fed has refrained from making any taper timelines yet, downplaying the threat of inflation and reiterating that they’d like to see stronger jobs growth before reducing stimulus. This might be enough to keep downside pressure on the dollar for the time being.

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