Following a rather still morning, the Euro hit the 55-hour SMA at 1.14 mid-Friday and consequently accelerated 132 pips until Tuesday morning when EUR/USD tested the weekly R2 near 1.1550. This strong appreciation pushed the rate out of two channels, the most senior of which was formed mid-July.
It is likely that the Euro tries to make a retracement from the breached one-month channel. The same bearish signals are given by technical indicators which should ease a bit from the overbought territory. Today’s downside target is the breached channel line, the 55-period (4H) SMA and the 50.00% Fibonacci retracement at 1.1450.
In case of a surge, bullish gains are unlikely to exceed the monthly S1 at 1.1580. This move north should then be followed by a price decline down to the aforementioned area.
