EURUSD continued to trade near four-month highs as EU leaders extended their recovery fund talks for another day on Monday.
Previously, the pair shot northwards after breaking a bullish flag pattern on the upside, signaling the continuation of the positive trend. But resistance around 1.1450 is currently looking like a hurdle.
Technically, there is some room for improvement as the upward-sloping RSI and the fast-Stochastics have yet to confirm an overbought market. The MACD is also providing encouraging signals as the indicator keeps positive momentum above its red signal line.
Still, only a close above the key 1.1450-1.1500 territory could bring fresh buying pressure into the market, with the spotlight likely shifting next to the 50% Fibonacci of the 1.2554-1.0636 long bearish wave, around 1.1600. Higher, the pair could retest the 1.1730 barrier ahead of the 61.8% Fibonacci of 1.1820.
To the downside, the 38.2% Fibonacci of 1.1370 managed to halt downside corrections last week and it could immediately take action if the price reverses lower. Should it prove fragile this time, the door would open for the 20-day simple moving average (SMA) currently around 1.1300. Falling lower and beneath the 1.1250 restrictive zone, the next target could be the 50-day SMA and the surface of the channel both around 1.1185.
Meanwhile in the medium-term picture, the pair is in neutral mode within the 1.1500 and 1.0636 boundaries. However, the distance between the 50- and the 200-day SMAs is increasing after the lines posted a golden cross, keeping hopes for an outlook improvement strong.
In brief, the short-term risk in EURUSD is still tilted to the upside and it would be interesting to see if the price is able to clear the 1.1450-1.1500 area, resuming its upward direction in the medium-term timeframe too.
