Technical analysis: EUR/USD skyrockets above 1.1500 as Dollar crumbles

EURUSD broke another technical barrier on Monday, surging above the 1.1500 handle to hit a three-and-a-half-year peak of 1.1572 amid the ongoing selloff in the US currency. The dollar came under pressure again yesterday after US President Trump renewed his attack on Federal Reserve Chair Jerome Powell.

The pair is trading well above its medium-term ascending trendline, as well as its simple moving averages (SMA). But it’s unclear how sustainable this rally is in the short term, as the RSI has crossed above the 70 overbought level, while the stochastics are hovering right beneath the corresponding mark.

Should EURUSD continue its ascent, the next hurdle is the 138.2% Fibonacci extension of the September 2024-January 2025 downtrend at 1.1609. Not far higher is the 1.1700 handle, and after that, the main challenge is to overcome the 161.8% Fibonacci extension of 1.1854.

However, if bulls run out of breath, immediate support is likely to come from the most recent uptrend line, which is intersecting with the 123.6% Fibonacci extension of 1.1457. A drop lower would bring into scope the September 2024 peak of 1.1213, followed by the 20-day SMA at 1.1097. After that, there’s likely to be another major battle in the heavily congested 1.0850 region, which contains the 50-day SMA.

All in all, EURUSD is strongly bullish in the short- and medium-terms but the speed of the uptrend is subject to shift, with a near-term correction possible. A major test to the upside is the 1.1700 level, while to the downside, holding above the 20-day SMA will be key in maintaining momentum.