EURUSD recently surged past the resistance at the 1.1250-1.1300 psychological levels then climbed close to the 1.1450 minor psychological resistance. Price retreated from here, indicating that a correction from the rally is happening.
Applying the Fib tool on the latest swing low and high on the 1-hour time frame shows that the 61.8% retracement level coincides with the broken resistance, which might now hold as support. The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside while the 200 SMA lines up with the 50% Fib, which might also keep losses in check.
Stochastic has pulled up from the oversold area to indicate a return in buying pressure. This could reflect a shallow correction opportunity so the 23.6% Fib might already be enough to hold as support and push the pair up to the swing high and beyond.
Euro zone data turned out mixed on Monday as some final manufacturing PMI readings from its top economies fell short of expectations. Meanwhile, the US printed an impressive ISM manufacturing PMI reading which reflected stronger hiring for the month, hinting that the NFP release might beat estimates as well.
Only the Spanish unemployment change report is due from the euro zone today and analysts are expecting to see a 120.3K drop in joblessness. US banks are closed for the Fourth of July holiday.
By Kate Curtis from Trader’s Way