EUR/USD staged a quick recovery last week, with the price crawling above the 200-day simple moving average (SMA) for the first time in more than a year.
On Monday, the bullish pattern gained extra credence as the EUR/USD pair extended its positive momentum towards a new three month high of 1.1385.
According to the RSI, which maintains a positive slope above its 50 neutral mark, there is still some upside in store. The indicator, however, is not far above the 70 overbought level, a sign that downside corrections may soon emerge. Stochastics are also approaching the overbought region.
Another step higher may meet nearby resistance within the 1.1418-1.1450 area. Breaking that zone, the bulls could next head towards the 1.1514-1.1560 territory.
The 200-day SMA currently around 1.1346 and near a former key resistance area should be closely watched in case the bears retake control. Should the price drop back below the line and more importantly under the April peak of 1.1320, the target will shift towards 1.1262, the inside swing high of May 13.
Meanwhile in the three-month timeframe, neutral conditions are still in place as long as the market keeps trading under the 1.1450 level.
Summing up, EUR/USD is looking cautiously bullish in the short-term and neutral in the medium-term.
by Christina Parthenidou, XM Investment Research Desk
Christina joined the XM investment research department in May 2017.
She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics. Previously, she earned a bachelor of science in Economics from the University of Cyprus. Apart from foreign exchange markets, her research interests include the impact of International trade on labour markets and product development.