The euro (EUR) gained a bit against the US dollar (USD) on Monday, reaching a one-week high as the dollar continued to show general weakness. At that moment, EUR/USD was trading around 1.1910, reflecting an increase of nearly 0.74% for the day.
Conversely, the dollar index (DXY), which measures the dollar against a basket of six major currencies, hovered around 96.98. This marks the lowest point for the index in six days, signaling a second consecutive day of decline.
Looking at the daily charts, EUR/USD appears stable above its key moving averages. The 21-day simple moving average (SMA) has maintained a position above both the 50-day and 100-day SMAs, indicating a bullish trend, as all three averages remain on the rise. Currently, the 21-day SMA stands at 1.1780, serving as an initial layer of support.
Price dynamics seem promising, especially after the pair broke out of a period of consolidation in late January. It has been rebounding nicely after retesting the former upper range, where previous resistance has now transformed into support.
Looking ahead, the psychological level at 1.2000, along with the January 27 high at 1.2082, represents a short-term resistance zone. If the pair achieves a decisive daily close above this zone, it would confirm a breakout and potentially lead to further upside movement.
On the flip side, the larger technical outlook remains quite favorable. The 100-day SMA is positioned at 1.1678, providing a solid support area, as long as EUR/USD trades above the key moving averages and the top of the earlier consolidation range.
Momentum indicators are also looking supportive. The Relative Strength Index (RSI) hovers near 60, while the Average Directional Index (ADX) is around 32, suggesting a strengthening underlying trend.
