EUR/USD - ‘Golden Cross’ & a pullback ahead of Draghi speech

A ‘Golden Cross’ i.e. a bullish crossover between 50-DMA and 200-DMA has yet again proved to be a laggard/contrary indicator. The bullish crossover, confirmed on the EUR/USD pair on May 23, has been followed by a pull back to 1.1165 (Asian session low).

Eyes Draghi speech

European Central Bank President Mario Draghi will address the European Parliament today at 13:00 GMT. Draghi had hailed Eurozone recovery during a speech in Madrid last week.

It is highly unlikely that Draghi would change the tune today.  The President will most likely reiterate the last week’s message - "Eurozone is seeing an increasingly solid recovery, driven largely by a virtuous circle of employment and consumption, although underlying inflation pressures remain subdued". Hence, Draghi’s address to the EU Parliament could turn out to be a non-event for the EUR pairs.

The trading volumes are likely to be thin on account of the bank holiday in London. The US markets are closed on account of the Memorial Day holiday as well.

EUR/USD Technical Levels

The spot traded below the 10-DMA level of 1.1174 in Asia. An intraday break above 1.1268 (May 23 high) would expose US Election Day high of 1.1299. A daily close above 1.1299 would signal continuation of the rally from 1.0839 (May 11 low) and could yield 1.1366 (Aug 2016 high).

On the other hand, support is seen at 1.1075 (May 18 low), which, if breached, would open up downside towards 1.10 (zero levels). On a larger scheme of things, a daily close below 1.10 would signal a top has been made at 1.1268 (May 23 low) and shall expose the upward sloping 50-DMA currently seen at 1.0862.

Note - the daily RSI is turning lower from the overbought territory.