EURUSD retraces after a rapid surge towards a 2½-month high.
- EURUSD adds 200 pips and tries to reach 1.0900
- Trades well above moving average lines
- RSI suggests a negative correction
EURUSD skyrocketed yesterday after the US CPI release and added almost 200 pips, recording a new two-and-a-half-month high of 1.0886, but its rally seems to have temporarily paused.
Approaching the 1.0900 area, it seems to be a real struggle to surpass this round number according to the RSI. The RSI is losing momentum after it touches the overbought region; however, the MACD oscillator is still strengthening its bullish movement, suggesting that the bulls may not give the battle yet. Also, the pair climbed well above the 200-day exponential moving average (EMA) and the 200-day simple moving average (SMA), which were acting as strong resistance levels in the past and the 20- and 50-day SMAs printed a bullish crossover.
In the event the pair re-activates its uptrend above Tuesday’s top of 1.0886, the next target will be the 1.0945 resistance. Even higher, the bulls might head for the 1.1065 barricade, which was a key resistance zone during August.
On the downside, the 200-day SMA at 1.0800 is the first stop to have in mind ahead of the 1.0755 support and the 200-day EMA at 1.0733. Hence, a step beneath that line, the 1.0655 line, which overlaps with the 20-day SMA might produce negative volatility.
Summarizing, EURUSD is sustaining an upward trend above the moving average lines and well above the short-term uptrend line. To attract new buyers, the pair will need to pierce through the 1.0900 psychological mark.