EURUSD Bounce Must Break 1.0760 Barrier to Indicate Stronger Correction

The EURUSD pair saw a rebound on Monday as traders took profits from the decline observed on Thursday and Friday. Despite weaker-than-expected German Ifo data, the euro regained traction due to improving sentiment driven by growing expectations of a European Central Bank (ECB) rate cut following recent weak economic indicators.

Market attention now shifts to the upcoming US PCE data and the French election, both expected to provide fresh signals later this week.

The formation of a double-bottom pattern around the 1.0670 zone on the daily chart, along with a likely bullish engulfing pattern, generates initial positive signals. Additionally, a magnetic daily cloud twist expected on Wednesday adds to the bullish sentiment.

However, the downside remains at risk as long as the current rebound stays below the key resistance at the 1.0760 zone, which includes the daily Tenkan-sen and the 38.2% Fibonacci retracement of the 1.0915 to 1.0667 drop. The 14-day momentum remains deeply negative, indicating that the correction of the larger downtrend may be limited.

A firm break through the 1.0760/80 zone is necessary to ease downside risks, though several strong barriers above this level could make further recovery attempts more challenging.

Res: 1.0731; 1.0760; 1.0785; 1.0800
Sup: 1.0700; 1.0667; 1.0649; 1.0624