EURUSD opened the week silently, hovering near Friday’s closing price and around the 20-day simple moving average (SMA) at 1.1046.
The 1.1120 – 1.1180 territory, which has been a key constraint to upside and downside movements since the end of November, remains the main target following the bounce off 1.0805. Interestingly, the 61.8% Fibonacci retracement of the 1.0636 – 1.2348 upleg is placed within this zone, while the 50-day SMA is approaching that area too, making any violation here important to watch. Should the bulls successfully knock down that wall, the price could accelerate towards the tentative descending trendline at 1.1350 drawn from the peak of 1.2265. Another victory at this point, and particularly a decisive close above the former resistance of 1.1370, could see an extension towards the 50% Fibonacci of 1.1492 and the 200-day SMA.
From a technical perspective, downside risks have faded but they have not been eliminated in the short-term picture as the MACD keeps distancing itself above its red signal line and within the negative area, while the RSI, although below its 50 neutral mark, is maintaining a positive trend. On the other hand, up until now, the market structure in March has taken the shape of a rising wedge at the bottom of a downtrend, which is usually dissolved on the downside. Nevertheless, if the price manages to set a foothold above the 20-day SMA in the coming sessions, that could be an encouraging sign that buying appetite has started to grow in the market.
Otherwise, if the pair dives below the 1.1000 mark, where the 78.6% Fibonacci retracement is intersecting the short-term supportive trendline, the 1.0900 level could come first to the rescue. If not, the bears may attempt to breach the 1.0850 – 1.0780 floor with scope to reach the pandemic low of 1.0636.
Summarizing, although the medium-term outlook for EURUSD remains blurry below 1.1492, some recovery cannot be ruled out in the short-term. However, traders may wisely wait for a break above 1.1120 – 1.1180 to become more confident that the latest rebound in the pair will continue.
