- The near 90-degree rally in the EUR/USD from the Aug. 15 low of 1.1301 has neared a key resistance zone of 1.1750-1.1780.
- The path of least resistance is on the higher side, the moving averages indicate, so, the spot look set to take out the resistance zone.
- The upside break may remain elusive if the lack of progress in the US-China trade talks hurts risk assets and the US A2 GDP is revised higher.
The EUR/USD’s pullback from the 28-day high of 1.1733 clocked yesterday, indicates the “V-shaped” rally from the Aug. 24 low of 1.1301 has likely run out of steam near the 1.1750-1.1780 resistance range.
At press time, the pair is trading at 1.1690. The 100-day moving average (MA) is located at 1.1754 and the 38.2 percent Fibonacci retracement of the yearly high and low is seen at 1.1780.
A convincing break above the resistance zone of 1.1750-1.1780 will keep the rally going.
The bullish breakout would happen if the US second-quarter GDP is revised lower today, reinforcing the dovish Fed expectations.
Further, the risk assets need to continue rising, although the lack of progress in the trade negotiations between the US and China could complicate matters for the risk sentiment and the common currency.
Technically speaking, the pair is more likely to find acceptance above the 1.1750-1.1780 resistance zone as the 100-day moving average (MA) is located above the 200-hour MA, suggesting the path of the least resistance is to the higher side.
EUR/USD Technical Levels
Resistance
1.1709 (23.6% Fib R of 1.10341-1.2556),
1.1755 (100-day MA)
1.1780 (38.2% Fib R of 2018 high/low)
Support
1.1676 (50-hour MA)
1.1654 (support as per the hourly chart)
1.1627 (100-hour MA)
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