EURUSD has been underperforming in the past three days after it reached a new more than three-year high of 1.2554 during the prior week. The price created a pullback and is now trading slightly lower near the 20-simple moving average in the daily timeframe. The short-term technical indicators are bearish and point to more weakness in the market.
From the technical point of view, the MACD oscillator is moving lower in the positive territory below its trigger line, signaling further downside potential move. Also, the ROC indicator is sloping slightly to the upside in the negative zone, however, an indication for an upside movement could be identified if the indicator crosses above the zero line.
Should prices reverse lower, immediate support could come at 1.2200 strong psychological level, which holds near the 40-day SMA. Below that, the 1.2160 barrier is another major support. A drop below the aforementioned area could take the world’s most traded currency pair towards its ascending trend line, which overlaps with the 1.2080 level and the 23.6% Fibonacci retracement level of the up-leg from 1.0560 to 1.2540.
To the upside, there is a significant resistance area within 1.2540 and 1.2570 obstacles, taken from the high in December 2014. A rally above those levels could drive the price further up, challenging the 1.2880 resistance level in the medium-term.
