The EURUSD raced higher yesterday after weaker US data shift the bias to selling the greenback. The move to the upside saw the price extend above its 50% retracement and 200 hour moving average both around the 1.05658 level. However, by the close, the price had dipped back below those key levels, closing yesterday at 1.0551.
In the early Asian session today, the 200 hour moving average (green line in the chart above) was tested, but found willing sellers against the level (it moved below the 50% retracement by that time). The price rotated back to the downside, and is currently trading back below the 38.2% retracement at 1.05168, and the earlier highs for the week at 1.05195 (from Monday) and 1.0507 (from Wednesday).. The current price trades at 1.0501 after extending to a new session low in the current hourly bar at 1.0475.
For the trading week, the low price was reached on Wednesday at 1.0358. That got within 19 pips of the January 3, 2017 swing low at 1.0339. A break below that level would take the pair be the lowest level since December 2002. The low this week also stayed above the swing low from May 12 at 1.03485.
The inability to extend below those key downside targets, and a Fed chair who kept the door open for only a 50 basis point hike in July, led to a sharp move higher on Wednesday (USD selling). As mentioned above, the weaker US data yesterday sent the pair moving further to the upside.
What now?
The pair trades between the 100 hour MA below and the 200 hour MA above. Between sits the 38.2% retracement.
A move below the 100 hour moving average below at 1.04547 would increase the bearish bias and give the sellers full control once again. Conversely, moving back above the 38.2% retracement 1.05168 with momentum would have traders looking back toward the 200 hour moving average 1.05492 followed by the 50% at 1.05658. Getting above those levels again (and staying above) would open the door for further upside probing.
Looking at the daily chart, on the topside the 1.0635 area and the 38.2% of the move down from the January 2022 high (and year high) at 1.0786 are key targets. The corrective highs off the May low, stalled right near those MA levels and backed off (see chart below).
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