An inverted head-shoulders pattern targets 1.1750 before resuming the downtrend

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  • EUR / USD extends its five-day rally, trading above 1.1600.
  • A weaker dollar boosts the EUR / USD pair, even as US 10-year yields rose, above 1,641%.

The pair EUR/USD it rises during the American session, rising 0.22%, trading at 1.1636 at the time of writing this article. Market sentiment remains bullish as major US stock indices post gains between 0.46% and 68%, while the safe haven status of the US dollar weakens overall.

The EUR extended its five-day rally, although weaker, it regained the 1.1600 level. The US dollar sell-off saw the US dollar index drop below 94.00 despite rising US Treasury yields, with the 10-year yield climbing nearly six basis points, reaching the 1,641%, at the time of publication.

EUR / USD Price Forecast: Technical Outlook

The EUR / USD daily chart shows that an inverse head and shoulders pattern formed around the 2021 lows, indicating that the EUR / USD is under some buying pressure. The measured target of the inverse head and shoulders pattern is 1.1750, close to the 50% Fibonacci retracement, which could resume the long-term bearish move towards a retest of the 2021 lows.

To challenge the US dollar bulls, euro buyers will need a daily close above 1.1800, close to the 100-day moving average (DMA). In that result, the September 14 high at 1.1846 would be the first resistance level, followed by 1.1900.

On the other hand, to resume the downtrend, the USD bulls will need to push the EUR / USD below the 1.1600 threshold. If the EUR / USD sellers exert enough pressure to drive a daily close below 1.1600, a challenge from the 2021 lows around 1.1524 is up for grabs.

The Relative Strength Index (RSI), a momentum indicator, is at 48, trending slightly upward, indicating that buying pressure is building on the EUR. However, caution is warranted as the RSI remains below the 50 midline.

TECHNICAL LEVELS

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