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EUR/USD ready for a break-out ahead of CPI

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The single currency ran out of momentum the last couple of days against the dollar after several unsuccessful attempts to break the strong resistance level at 1.2500. Following that, the pair came under pressure around that area and fell back below the 50-period SMA, where it consolidates for some time now, as seen on the 4-hour chart.

A clear break outside the pattern should enforce the pair’s new directional movement. Currently, the price is challenging the 1.2400 level, which coincides with the lower boundary of the triangle. If we fail to see a break below these hurdles, then I would expect the price to move further down towards the strong support level of 1.2365 for a retest.

Alternatively, a break above the psychological level of 1.2500 will open the way towards the next resistance level of 1.2600. Short term studies support this idea since the MACD is moving upwards and is ready to step in a bullish territory. In addition, the Relative Strength Index is following an upward path suggesting that the bears are losing ground.

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