EURUSD recently broke above the falling trend line on its 4-hour time frame to indicate that a reversal from the downtrend is due. Price could still retest the broken resistance before gaining traction on its uptrend.

Applying the Fibonacci retracement tool shows where more buyers might be looking to hop in. The 50% level is close to the broken trend line around the 1.1800 area, as well as the dynamic support at the moving averages.

The 100 SMA is still below the 200 SMA to suggest that the path of least resistance is to the downside, but the gap between the indicators has narrowed to reflect weaker bearish pressure. If a bullish crossover follows, the uptrend could pick up.

Stochastic is already indicating oversold conditions or exhaustion among sellers, so turning higher would confirm that buyers are taking over. RSI has more room to move south, though, so selling pressure could persist until oversold conditions are met.

Once that happens, EURUSD could recover to the swing high around 1.1900 or higher.

The ECB decision later this week would determine where the shared currency is headed next, as any clarification on their taper timeline might be a bullish catalyst. On the other hand, refraining from disclosing whether or not they plan to extend or end the PEPP by early next year could mean more downside.

The dollar is under weak footing recently, as the NFP report printed weaker than expected job gains. This underscores the Fed’s view that they should be in no rush to taper or tighten until significant progress is made in the labor market.

Although Fed head Powell confirmed that they would likely reduce asset purchases by the end of the year, many interpret this to be a “dovish taper” since it won’t guarantee when interest rates might be hiked.