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EUR/USD has gapped lower and with a bearish RSI momentum divergence in place, the Credit Suisse analyst team looks for a correction to the uptrend but with the broader trend still seen higher.

Key quotes

“EUR/USD strength looks to have peaked near-term with the market gapping lower at the open this morning and with daily RSI momentum having failed to confirm the latest high, we look for a correction to the core uptrend to emerge, but with this seen as a temporary pause within the broader uptrend.” 

“Support is seen initially at the 13-day exponential average at 1.2145/41 ahead of price support at 1.2126/16, which we look to try and hold. A break though would raise the prospect of a more concerted setback and a fall back to the 1.2059 recent low, potentially as far as what we expect to be better support at 1.2017/11 – the 38.2% retracement of the November/December rally and September high – with a better floor expected here.” 

“Resistance is seen at 1.2213 initially, then the price gap from the open this morning at 1.2236/59. Back above here is needed to reassert an upward bias for strength back to 1.2273, ahead of the March ‘measured base objective’ at 1.2355. Big picture, we continue to look for our core objective from late July at 1.2518/98.”