EURUSD Technical Analysis: Will the Single Currency Break Out of Its Trading Range or Pull Back? Discover the latest analysis on EURUSD as the single currency reaches the upper boundary of its trading range. Will we see a breakout or a pull back? Find out with our technical analysis and stay ahead of the markets
EURUSD: Break out of range or pull back?
The single currency has risen above $1.11, almost repeating its late December peak. At current
levels, the pair is within the upper boundary of its trading range, and the technical analysis suggests
that a breakout is more likely than a pullback.
Thanks to two bullish impulses since the beginning of July, EURUSD has moved from the lower
boundary of the trading range established in early 2023 at 1.07 to the upper boundary above 1.11.
Since the beginning of this week, active buying has pushed the pair above its 200-week moving
average. This could potentially be an important signal of a regime change in the market, although
cautious players may note that the same signal proved false last July and lagged severely in 2012
and 2017.
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The daily timeframes show overheating as the RSI has climbed close to 75, the level from which an
11-week sell-off began in July 2023.
However, the major moving averages are bullish. A golden cross was formed earlier this week, with
the 50-day moving average above the 200-day moving average. Both are below the price, which also
adds to the bullishness. The subsequent rally in the EURUSD has confirmed this important technical
signal for many managers.
However, even this bullish technique needs fundamentals. The markets will need to dig deeper into
the minutes of the latest Fed meeting, which will be published at the end of Wednesday. Powell’s live
speech at Jackson Hole on Friday is still highly influential and could answer the question of whether
the Fed is considering a 50-point rate cut next month.
Of note on Wednesday is the annual revision of US employment data, which could dramatically
change the picture of the economy in recent months. Some observers are talking about a possible
downward revision of 0.6-1.0 million jobs for the year. The latest weak jobs data was extremely
painful for traders earlier this month, triggering a sell-off in equities despite a surge in rate cut
expectations. Will this scenario be repeated?
