EURUSD is trending higher on its 1-hour chart as price tests support at a rising trend line that’s been holding for a week. Technical indicators are suggesting that a bullish bounce is due.
The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside or that the climb is more likely to resume than to reverse. However, the faster-moving MA appears to be turning lower and might narrow the gap with the slower-moving MA to signal weakening bullish momentum.
A break below the trend line around the 1.1000 major psychological support could set off a reversal from the short-term climb, although the 200 SMA dynamic inflection point could still hold as a floor.
Stochastic is on the move up after recently pulling out of the overbought zone, reflecting a return in bullish momentum. RSI is still heading lower but nearing the overbought region to suggest that sellers might be exhausted and willing to let buyers take over.
The US dollar has been under pressure lately as analysts are focused on the spread of the coronavirus in populated states like New York and Los Angeles. The Trump administration recently approved a $2 trillion stimulus package and may be looking to dole out another one in order to keep the economy supported throughout the fallout.
Meanwhile, there have been reports that the contagion in European nations like Italy and Spain is starting to slow, which could be bullish for the euro in the near-term. Economic reports have been mixed as these reflected the impact of weaker oil prices and spending activity over the past month.
No additional stimulus efforts are expected from the ECB for the time being, though, so the shared currency might be able to keep losses at bay.