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Technical Analysis – EURUSD kickstarts a bullish party after ECB

Technical Analysis – EURUSD kickstarts a bullish party after ECB

EURUSD skyrocketed to 1.0920 on headlines the ECB is not thinking of pausing rate hikes after raising interest rates to a 22-year high on Thursday as expected.

The pair is experiencing one of its best daily sessions since the start of the year, but the bulls will need to reclaim the September support-turned-resistance trendline, which is currently under examination, in order to stay in power during the coming sessions. The 61.8% Fibonacci retracement of the latest downleg in the four-hour chart is making this area important to watch.

Meanwhile, the RSI and the stochastic oscillator are close to their overbought levels, increasing the odds for a downside reversal. An extension above the nearby barrier of 1.0940 could play down that negative scenario, likely boosting buying confidence towards the 1.1000 psychological mark. The 1.1033-1.1050 region could be the next challenge.

On the downside, support could initially develop around the 50% Fibonacci mark of 1.0860. If that floor cracks, the next stop could be near the 20-period exponential moving average EMA and the 38.2% Fibonacci of 1.0810. Even lower, the pair may attempt to set a foothold somewhere between the 50-period EMA and the long-term falling constraining line at 1.0760.

Overall, the latest ECB-driven remarkable spike in EURUSD seems to be testing a make-or-break point. An extension above 1.0940 could generate more upside, while a pullback below 1.0900 could motivate some profit-taking towards 1.0860.

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