The pair opened with a gap higher in the morning, but gave back gains already
The euro got a shot in the arm over the weekend after German coalition talks progressed healthily, while the dollar slumped as the US government shuts down.
I've said it last week, it's a good opportunity to fade the fear - and that was the trade this morning. EUR/USD opened near the 1.2270 levels but the pair is trading at 1.2230 now. The dollar has also recovered in similar fashion against other major currencies as well.
Anyway, in EUR/USD the downside move is stalling at the 23.6 retracement level on the hourly chart; also supported by the upward trendline from last week. For now, that seems to be where buyers are clinging onto - but the real test is the 100-hour MA that buyers need to break through at 1.2239.
Unless buyers stay above that, we won't be seeing a test back up to the 1.2300 levels for the time being. But a narrowing wedge is forming between the 100-hour MA and the upward trendline, so inevitably a break out is imminent in the short-term.
