EUR/USD – Recovery Requires Additional Positive Signals to Continue

The Euro gained traction, bouncing back by 0.3% after repeatedly finding support at the 100DMA (1.0814) following a pullback from the May 16 high of 1.0895. This formed an initial signal of a double-bottom pattern, suggesting a potential end to the corrective phase.

The recent strength has retraced over 50% of the 1.0895/1.0812 pullback and is on track to complete a bullish engulfing pattern on the daily chart, which would further reinforce the reversal signal.

Daily moving averages have returned to a bullish setup, highlighted by a golden cross between the 10DMA and 200DMA, with the 20DMA and 200DMA converging to form another bullish cross. Positive momentum remains strong, enhancing the technical outlook.

Better-than-expected May PMI data from Germany and the Eurozone, released earlier today, boosted the Euro by increasing expectations for an ECB rate cut in June. However, strong US PMI data partially offset this positive impact.

A daily close above the broken 50% retracement level at 1.0853 is essential to sustain the fresh bullish momentum for further recovery and a possible challenge of key near-term barriers at 1.0891/95 (76.4% Fibonacci retracement / May 16 peak).

Conversely, a dip and close below the rising 10DMA at 1.0838 would weaken the near-term structure and risk a renewed attack on the crucial 100DMA support. A loss of this level would shift the near-term focus to the downside.

Res: 1.0838; 1.0885; 1.0891; 1.0942
Sup: 1.0838; 1.0814; 1.0786; 1.0760