EUR/USD rallied on Thursday, breaking two resistance (now turned into support) barriers in a row. Nevertheless, the surge was halted by the 1.1800 zone, slightly above the 1.1790 hurdle, marked by the peak of the 9th of July. The rate is trading above the short-term upside support line drawn from the low of the 15th of August, and also above the prior medium-term downside resistance line taken from the high of the 17th of April. Thus, we would consider the near-term outlook to be positive for now.
Another attempt by the bulls to overcome the 1.1790 barrier may set the stage for our next resistance zone of 1.1840, defined by the high of the 7th of June, also slightly below the peak of the 14th of that month. However, before the next positive leg we see the case for a corrective retreat. A break below 1.1750 could confirm the notion and the rate could slide towards 1.1715 from where the bulls could take charge again.
This is also supported by our short-term oscillators. The RSI topped slightly above 70 and fell back below that level, while the MACD, although above both its zero and trigger lines, shows signs of topping as well.
Now, even if the 1.1715 support does not hold and the rate corrects further, the outlook would stay cautiously positive, in our view. We believe that there could still be a decent chance for the bulls to take charge from near the aforementioned short-term upside line. We would like to see a clear and decisive break below 1.1660 before we start examining the case of a near-term reversal to the downside. Such a dip could initially aim for our next support of 1.1620, the break of which could pave the way for the 1.1570 zone.
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