EUR/USD has been consolidating near the 1.0850 level after its recent rally, and technical indicators suggest the pair may face a significant test at the 1.0900 resistance zone. Here is our in-depth technical outlook for the world’s most traded currency pair.
Daily Chart Analysis
On the daily chart, EUR/USD has formed a potential double-top pattern near 1.0890. The neckline of this pattern sits at 1.0820, and a decisive break below this level would confirm the formation and target a move toward 1.0720.
Key Technical Levels:
- Resistance: 1.0900, 1.0950, 1.1000
- Support: 1.0820, 1.0780, 1.0720
RSI Divergence Signal
A bearish divergence on the 4-hour RSI adds weight to the cautious outlook. While price made a higher high above 1.0880, the RSI made a lower high, suggesting weakening momentum. This type of divergence often precedes a pullback.
Moving Average Outlook
The 50-day exponential moving average (EMA) at 1.0810 provides dynamic support, while the 200-day EMA at 1.0745 represents a more significant floor. The pair is trading above both, maintaining its broader uptrend, but the short-term momentum is fading.
Our technical bias is neutral-to-bearish in the short term while EUR/USD remains below 1.0900. A break above this level would flip our bias to bullish and target 1.0950.
Trading Strategy
Conservative traders may prefer to wait for a clear break above 1.0900 before entering long positions, with stops below 1.0820. Bears could look to sell rallies toward 1.0880-1.0900 with targets at 1.0820 and 1.0780.