The EURUSD closed higher yesterday after a choppy, back-and-forth session. Today, the pair extended its recovery and moved above its 100-hour moving average for the first time since the June 17 FOMC meeting, when the Federal Reserve adopted a more hawkish tone.
Recall that following that Fed decision, the pair fell sharply from around 1.1593 to Wednesday’s low of 1.1324.
With today’s break back above the 100-hour moving average it is giving buyers some momentum and shifted attention to the next key target at 1.1411—the low from mid-March. Once that level was broken, buyers gained additional confidence, helping lift the pair to a session high of 1.1434.
However, the rally has since lost steam.
The pair has rotated back to the downside and, as I write, is slipping back below the 1.1411 level. That was an important level for buyers to hold to keep the progression to the upside in the short term, but selling pressure is beginning to overwhelm the recovery effort. The EURUSD is currently trading around 1.1392.
On the downside, the 100-hour moving average, now at 1.1383, remains a critical support level. If buyers can defend that area, they still have a chance to keep the short-term recovery alive, but understand that the technical bias is neutral with a bearish tilt.
Given the strong, trend-like decline from the April high, buyers still have much to prove. A sustained move back above the 200-hour moving average would provide both technical and price-action evidence that control is shifting back in their favor.
For now, though, the latest rally appears to be running out of steam.
