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EUR/USD Recovery Could Fade Above 1.0650

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Aayush Jindal

Key Highlights

  • EUR/USD started an upside correction above 1.0500.
  • It broke a key bearish trend line with resistance near 1.0490 on the 4-hours chart.
  • GBP/USD also recovered higher and cleared the 1.2500 resistance.
  • Gold price attempted an upside break above $1,860.

EUR/USD Technical Analysis

The Euro started a decent recovery wave above the 1.0470 level against the US Dollar. EUR/USD even cleared the 1.0500 level to move into a short-term positive zone.

Looking at the 4-hours chart, the pair formed a base above 1.0350 and recovered higher. There was a clear move above a key bearish trend line with resistance near 1.0490. The pair surpassed the 1.0520 resistance zone and the 100 simple moving average (red, 4-hours).

It even climbed above the 50% Fib retracement level of the key decline from the 1.0641 swing high to 1.0349 low. On the upside, the pair is now facing resistance near the 1.0650 level and the 200 simple moving average (green, 4-hours).

The next major resistance is near the 1.0720. A clear move above the 1.0720 level might push the pair towards the key 1.0800 resistance zone.

If not, there is a risk of another decline below the 1.0500 level. The next key support is near 1.0450. A clear move below the 1.0450 level could stage a strong decline in the near term.

Looking at GBP/USD, the pair is also attempting an upside correction, but the bears might remain active near the 1.2620 level.

Economic Releases

  • German IFO Business Climate Index for May 2022 – Forecast 91.4, versus 91.8 previous.
  • German IFO Current Assessment Index for May 2022 - Forecast 97.2, versus 97.2 previous.
  • German IFO Expectations Index for May 2022 – Forecast 85.8, versus 86.7 previous.
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