EUR/USD has managed to stage a rebound and rose above 1.0500 during the American trading hours. With Wall Street's main indexes staying deep in negative territory, however, the pair is having a difficult time gathering bullish momentum.

The EUR/USD pair is posting fresh daily highs in the 1.0520 price zone, and the daily chart shows that the risk is skewed to the upside. The pair keeps developing above all of its moving averages, with the 20 SMA crossing above the 200 SMA, both at around 1.0360. The 100 SMA, in the meantime, grinds higher, far below then at around 1.0055. Finally, technical indicators are directionless, the Momentum just above its 100 level and the RSI near overbought readings.

The 4-hour chart shows that the pair is currently battling to overcome a still bullish 20 SMA while the longer moving averages maintain their upward slopes below the current level. At the same time, technical indicators turned higher within neutral levels, favoring a bullish extension without confirming it.

The EUR/USD daily chart suggests the pair remains upward biased but losing some momentum, as Monday’s candlestick printed an inverted hammer, which usually appears at the end of an uptrend/downtrend. Since Monday, the Relative Strength Index (RSI) has been aiming downward, while the Rate of Change (RoC) proves sellers are losing momentum. Therefore, the EUR/USD might pull back before resuming its uptrend.

The EUR/USD first support would be the 1.0480 December 5 low, followed by the 1.0400 figure and the 200-day Exponential Moving Average (EMA) at 1.0388.

EURUSD a short term buy on expected correction

Dec 06 2022