The EUR/USD pair saw a bounce on Monday as traders took profits from the previous week’s fall. Despite weaker than expected German Ifo data, the single currency gained traction due to improving sentiment on expectations of an ECB rate cut following recent weak economic data.
Investors are now turning their attention to US PCE data and the upcoming French election, both expected to provide new signals for the market. A double-bottom formation at the 1.0670 zone on the daily chart and a likely bullish engulfing pattern, along with a magnetic daily cloud twist on Wednesday, are initial signals of a potential upward movement.
However, the downside is still vulnerable as long as the current bounce remains below the upper resistance levels at the 1.0760 zone. The 14-day momentum indicator is deeply in negative territory, signaling limited correction of the larger downtrend. A clear break above the 1.0760/80 zone is necessary to ease downside risks, although there are strong barriers above that could hinder recovery attempts.
Resistance levels to watch include 1.0731, 1.0760, 1.0785, and 1.0800, while support levels are located at 1.0700, 1.0667, 1.0649, and 1.0624.
In addition to the technical analysis provided, it is important for traders to stay informed about economic data releases and geopolitical events that could impact the EUR/USD pair. Keeping an eye on central bank announcements and trade negotiations can also provide valuable insights into the future direction of the currency pair. By staying informed and monitoring key levels of support and resistance, traders can make more informed decisions when trading the EUR/USD pair.
