EURUSD hit a new 3-year high above 1.2200 and is holding above this level after breaching 1.2100 last week. The pair surged to 1.2239 for the first time since December 2014, after extending a rally that started off the low 1.1900 handle.
On the daily chart, trend and momentum technical indicators are bullish, keeping risk to the upside. The 50-day and 200-day moving averages remain positively aligned. The RSI and stochastics are rising although reaching overbought levels. This suggests that momentum could stall and there would be a pullback in the near term.
Dips are expected to be supported at 1.2100. To the upside, there is very little major resistance until the 1.2500 area, although upon reaching 1.2300 there could be some fading in the rally.
Last Friday’s daily close above 1.2100 has confirmed the bullish breakout and a sustained move higher would see a continuation of the underlying bullish trend that started a year ago, with scope to extend the rally to the 1.3000 area in the longer term.
