EURUSD Short-Term Trend Channel

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EURUSD is trending higher inside a rising channel connecting the higher lows and higher highs on the 1-hour chart. Price is testing support and a bounce off this area could take it to the next upside targets.

The Fibonacci extension tool shows where buyers might book profits next. The 38.2% level lines up with the mid-channel area of interest around the 1.1300 major psychological mark.

The 61.8% level coincides with the swing high around 1.1330 while the channel top is closer to the 78.6% level at the 1.1350 minor psychological resistance. Stronger bullish momentum could take it up to the full extension near 1.1375.

RSI is still heading south to signal that there is some selling pressure left, but stochastic is slowly turning higher to show that buyers are returning.

There’s not much in the way of major catalysts from the euro zone in the upcoming London session while the US only has consumer credit data due. Recent data from the region came in mixed, with German industrial production missing expectations and Italian retail sales beating the consensus.

Still, the shared currency could draw support from positive expectations surrounding the talks on the EU Recovery Fund. The negotiations are focusing on the allocation of the funds, whether it be loans or grants, but leaders are expected to reach an accord within the month.

The next set of catalysts for the dollar, meanwhile, include the initial jobless claims tomorrow and PPI figures due on Friday. Better than expected results could assure dollar traders that the US economy is starting to recover from the pandemic while downbeat data could bring in some downside.

Keep in mind, however, that risk sentiment has been a main driving factor these days. Fears of a second wave of the pandemic in several US states and even in other countries could keep safe-havens supported.

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