EUR/USD traded higher yesterday, but hit the 1.1990 resistance, marked by the highs of March 11th and 12th, and today, it pulled back. Overall, the rate is trading above the upside support line drawn from the low of March 9th, forming higher lows, but the failure to go for a higher high keeps us a bit on the skeptical side. Thus, we will adopt a cautiously-positive approach for now.
The current pullback may continue for a while and the bulls may take charge from near the upside line, aiming for another test near 1.1990. However, we would like to see a clear move above that hurdle before we get confident on larger advances. Such a move would confirm a forthcoming higher high and may initially target the 1.2055 zone, marked by an intraday swing high formed on March 4th. A break above that zone could encourage the bulls to sail towards the peak of March 3rd, at 1.2113.
Shifting attention to our short-term oscillators, we see that the RSI turned down and got back near its 50 line, while the MACD, although slightly above both its zero and trigger lines, has turned somewhat down as well. Both indicators detect slowing upside speed and support the case for some further retreat before the next leg north, perhaps for a test near the aforementioned upside line.
On the downside, we would like to see a clear dip below 1.1885 before we start examining whether the bears have gained the upper hand. This will also signal the break below the upside line and may initially pave the way towards the low of March 9th, at 1.1835. Slightly lower sits another potential support zone, at 1.1800, marked by the low of November 23rd, the break of which may carry more bearish implications, perhaps paving the way towards the low of November 11th, at 1.1745.
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