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EUR/USD has recovered strongly after holding as expected the 38.2% retracement of its November/January rally and 55-day average at 1.2065/54, but with a break above 1.2223/31 needed to confirm the correction is over and the core uptrend resumed, per Credit Suisse.

Key quotes

“EUR/USD has recovered as expected after falling to test and hold our first downside objective at 1.2067/54 – the December low, 38.2% retracement of the November/January rally and rising 55-day average. Strength though has been capped at the 13-day average, currently at 1.2167 and with a small ‘head & shoulders’ top still in place there remains the risk for further corrective weakness yet before the broader uptrend resumes.” 

“Support moves to 1.2102/00 initially, then 1.2085. Below 1.2054 on a closing basis can see support next at the September high at 1.2011 ahead of the 23.6% retracement of the entire 2020/2021 uptrend at 1.1945, with the ‘measured top objective’ at 1.1924/14. We would then look for an attempt to establish a fresh and ideally important floor here.” 

“Above 1.2167 can see strength extend further to 1.2179/80, then 1.2223/31, but with this needing to be cleared to negate the top to suggest the corrective setback is coming to an end for a move back to the 1.2350/55 highs.”