The US Dollar returned with a vengeance this week, soaring across the FX board after Federal Reserve Chair Jerome Powell testified about monetary policy before United States Congress. The EUR/USD pair plummeted to a low of 1.0523 but heads into the weekly close trading well above the 1.0600 mark, up for a second week in a row.

The EUR/USD pair developed for a third consecutive week between Fibonacci levels. The weekly low was set just ahead of the 50% retracement of the 2022 yearly slide at 1.0515, while advances were short of 1.0745, the 61.8% retracement of the same decline. The pair currently trades mid-way between such levels, and one would need to give up for a clearer directional movement.

Technical readings in the weekly chart suggest that not everything is lost for bulls. The 20 Simple Moving Average (SMA) keeps heading firmly higher and currently stands a handful of pips above the aforementioned Fibonacci support. On the other hand, the 100 SMA extended its decline well above the current level, now hovering around the 1.1000 psychological threshold. Finally, the Momentum indicator extended its decline with a firm downward slope and is about to challenge its midline, while the Relative Strength Index (RSI) indicator consolidates around 52.

On a daily basis, the bullish potential seems limited. The pair is currently battling with a flat 20 SMA, aiming to break above it. The 100 SMA advances below the current level and currently stands at around 1.0520, reinforcing the static support area. Finally, technical indicators gyrated north but remain just below their midlines, falling short of anticipating a steeper advance.

The pair now has support at 1.0600, with the next relevant one at 1.0515. It needs to clear the latter to have room to extend its decline towards the 1.0400 price zone. On the upside, the key is 1.0745, as sellers are likely to reject advances around it. Once beyond it, the rally could continue towards 1.0820.

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Mar 12 2023