EUR/USD – Recovery gains momentum, breaks above daily cloud top; 20/200 DMA bullish crossover reinforces outlook

The rebound, supported by a higher base around the 1.1660 area, has extended into a second consecutive session and broken through the key resistance at 1.1745—the upper boundary of the daily Ichimoku cloud. A sustained move above this level would reinforce bullish momentum and pave the way for further gains.

The recent pullback from the April 17 high at 1.1849 found solid support at 1.1681/75, which represents the 38.2% Fibonacci retracement of the 1.1410–1.1849 rally and aligns with the 200-day moving average. This zone also saw the formation of a double bottom and a bullish engulfing pattern on Friday.

Additionally, the rising 20-day moving average has crossed above the 200-day moving average, adding to the positive technical outlook, which remains broadly bullish on the daily timeframe.

A decisive break above the cloud top, along with the nearby 50% retracement and daily Tenkan-sen at 1.1759, would expose the next upside targets at 1.1790 and 1.1806, ahead of the key resistance at 1.1849.

Fundamentals also support this outlook. Economists expect the ECB to begin tightening policy as early as June, with a potential 50 basis point rate hike by October. Meanwhile, the Federal Reserve is widely anticipated to keep rates unchanged at its next meeting, likely the final policy decision under Jerome Powell, with expectations that the incoming Fed leadership may adopt a more accommodative stance in line with political pressure for lower rates.

On the downside, the previously broken 100-day moving average at 1.1706 has turned into strong support, which should help limit losses if the pair fails to clear the cloud top. Overall, the bullish bias is expected to remain intact as long as the price holds above the 200-day moving average, which has supported the trend since April 9.

Resistance levels: 1.1759, 1.1790, 1.1806, 1.1849
Support levels: 1.1730, 1.1706, 1.1675, 1.1636