- Better-than-expected economic data may underpin the euro against its major counterparts in the coming weeks.
- EUR/USD rates continue to consolidate the above key points.
The EUR/USD pair bounced from the 1.2060 region but remains below 1.21. The dollar eases as equities stage a modest comeback as retail investors' frenzy temporarily cooled.
EUR/USD DAILY CHART – HEAD AND SHOULDERS TOP OR UPSIDE CONTINUATION?
The technical outlook for EUR/USD rates appears relatively mixed as price carves out a possible Head and Shoulders reversal pattern above a key range at 1.2055 – 1.2070. EUR/USD is supported by an ascending trend-line which holding the exchange rate since May 2020.
Remaining constructively positioned above 1.2050 could open the door for buyers to continue driving the exchange rate higher, with a break above the previous swing high ( 1.2180) probably carving a path to challenge the yearly high (1.2350)
Technical indicator prints bearish MACD divergence suggests that the exchange rates rally since November could be running out strength . The MACD histogram's notable decline in recent days also hints a fading bullish momentum.
However, a daily close below the January 18 low (1.2050) which coincides with Fibonacci support 38.2% retracement of its November/January rally, would likely validate the bearish reversal pattern and intensify near-term selling pressure. The Head and Shoulders implied measured move suggesting that price could fall from current levels to the psychological support at 1.1800.
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