EURUSD maintains its underlying bull trend. The pair has been rising steadily in an ascending channel since April and peaked at 1.2091 on Friday. This was the highest level since December 2014.
The key 1.2100 level will likely be a challenge to break. Prices retreated just ahead of this resistance as upside momentum faded and EURUSD subsequently pulled back. Based on the momentum oscillators, it can be seen that the market’s upward trajectory has slowed over the past couple of weeks.
Both RSI and MACD indicators are moving sideways, although they remain in their respective bullish territory. This suggests there is some risk in the near-term for a corrective move lower which should find support at 1.1900. From here a deeper pull-back is expected to find support at the August 17 low of 1.1661. A break below next support at the July 18 low of 1.1471 would likely increase selling pressure. Focus would shift to the downside for a reversal in the uptrend as a move below this level would result in a more than 50% retracement of the upleg from 1.0820 to 1.2091.
Alternatively, if immediate support holds, then a move higher through resistance at 1.2100 would see a resumption of the uptrend. This would strengthen the bullish outlook with scope for EURUSD to rise to the 1.2200 area before targeting the next major high in the upper-1.2500 zone.
The uptrend appears to be firmly established in both the short and medium-term charts which suggests limited risk for a reversal in the trend for now, especially if the market remains above the key 1.2000 level. The positively aligned 50 and 200-day moving averages are supporting a bullish outlook. Meanwhile, the RSI and MACD are still in bullish territory (above 50 and above zero, respectively).