EUR/USD – Although the correction has been limited so far, the risk of a deeper pullback still exists

EUR/USD edged higher during European trading on Monday, as bears paused after a two-day retreat from a multi-week high of 1.0948.

The rising 10-day moving average (DMA) and the 23.6% Fibonacci retracement of the 1.0666 to 1.0948 move (at 1.0881) have contained dips, suggesting a shallow correction before the bulls potentially regain control.

Speculation about the potential start of easing monetary policy as early as September supports a positive outlook for the euro, with daily studies showing strong positive momentum and moving averages maintaining a bullish setup.

However, a weekly bull trap above the 1.0933 Fibonacci barrier and a weekly Doji candle with a long upper shadow indicate that the bulls might be losing strength, and a deeper pullback cannot be ruled out.

A sustained break below the 10 DMA and Fibonacci support at 1.0881 could trigger this bearish scenario, exposing the next supports at 1.0840/07 (38.2% and 50% Fibonacci retracements, and the 200 DMA).

Conversely, if EUR/USD can hold above the 1.0881 support, the near-term bias would remain bullish, with an extension and close above the 1.09 zone potentially signaling a reversal and the formation of a higher low.

Resistance levels: 1.0902; 1.0922; 1.0948; 1.0964
Support levels: 1.0881; 1.0840; 1.0807; 1.0788