The pair is slowly advancing on the session, with price now at a session high of 1.0946 as buyers are extending gains after a break of the 200-hour MA (blue line) earlier today.
This sees the near-term bias in the pair turn more bullish as the dollar continues to lose further momentum on the week as funding pressures begin to ease after the Fed action.
For now, EUR/USD is looking towards further resistance from the 38.2 retracement level @ 1.0964 and the 18 March high @ 1.0981. Buyers are also keeping an eye on the 1.1000 level as the upside momentum starts to build in the pair this week.
However, the key event to watch out for later today will be the US weekly initial jobless claims report. It is going to be a real showstopper and will give traders more clarity on how to proceed towards the latter stages of the week.
Buyers will be looking to try and keep any break above 1.1000 with the risk to any move to the upside being at the 200-hour MA. That will be a key area that buyers have to defend, as a fall back below that will see the near-term bias turn more neutral again.
In the big picture, a move back above 1.1000 will be a real dent in the dollar's recent run higher. But as the Fed removes some of the risks associated with potential financial dislocations, there is bound to be a bit of a setback.
The question is, by how much and for how long though?
The risk rally this week could encounter some a pause today or perhaps it may still turn better after the US data later. But if you look out over the next two to three weeks, the overall economic situation still doesn't look too healthy.
And that could give reason for the dollar to make a comeback if we do see more outflows in risky assets and emerging markets in particular.