EUR/USD has managed to regain its traction and climbed toward 0.9900 early Tuesday. The pair, however, seems to be struggling to gather enough momentum to clear that level. Nevertheless, the near-term technical outlook suggests that the pair has more room on the upside.

The disappointing PMI surveys from the US, which revealed that the economic activity in the private sector continued to contract at a strengthening pace in October, caused the greenback to lose interest in the second half of the day on Monday. With investors remaining optimistic about the Fed looking to adopt a less aggressive tightening stance toward the end of the year, Wall Street's main indexes registered strong gains and allowed EUR/USD to benefit from the improving market mood.

The Relative Strength Index (RSI) indicator on the four-hour chart started to edge higher after having declined toward 50 on Monday, pointing to a bullish shift in the short-term outlook. On the upside, 0.9900 (psychological level, static level) aligns as key resistance. A four-hour close above that level could open the door for another leg higher toward 0.9930 (static level) and 1.0000 (psychological level, static level) afterwards.

0.9840, where the Fibonacci 50% retracement and the 200-period SMA coincide, forms strong support ahead of 0.9800 (Fibonacci 38.2% retracement of the latest downtrend, 100-period SMA) 0.9750 (Fibonacci 23.6% retracement).

So far, the pair is retreating 0.02% at 0.9871 and the breakdown of 0.9631 (monthly low October 13) would target 0.9535 (2022 low September 28) en route to 0.9411 (weekly low June 17 2002). On the flip side, the next up barrier comes at 0.9899 (weekly high October 24) followed by 0.9999 (monthly high October 4) and finally 1.0050 (weekly high September 20).

Bears are counting on 0.9900 as a strong resistance

Oct 25 2022