The euro (EUR) continued its upward trend against the US dollar (USD) on Friday, benefiting from a decline in the dollar. Currently, EUR/USD is trading around 1.1575, marking its highest point since October 30th.
The pair has regained momentum after briefly hitting a three-month low on Wednesday and seems set for a weekly increase after two weeks of losses.
The daily chart reflects that the currency pair is operating within a descending parallel channel, which has dictated its movement since September 17, when EUR/USD peaked at 1.1918. The recent pullback has nudged the pair closer to the upper range of the channel, aligning with the 21-day simple moving average (SMA) around 1.1590.
A solid break above this range could draw in buyers, potentially leading to the 1.1665-1.1670 range where both the 50-day and 100-day SMAs meet. Maintaining strength beyond this point could signal a bullish breakout, signifying a significant trend shift since mid-September.
If we look at the downside, immediate support can be found at the weekly low of 1.1468 near the channel’s lower boundary. A drop below this level might heighten bearish pressures, with the July 31 low of 1.1461 marked as a possible next target.
There are encouraging signs among momentum indicators. The Relative Strength Index (RSI) has bounced back from nearly oversold levels and is now just under the 50 mark, which hints that bullish momentum is building. Additionally, the Moving Average Convergence Divergence (MACD) is showing initial signs of a bullish crossover as the signal line narrows and the histogram moves away from negative territory.
Overall, the short-term outlook for EUR/USD looks optimistic as long as it stays above 1.1500. Bulls seem to be regaining their confidence, and a daily close above 1.1600 could confirm the onset of a broader recovery after several weeks of decline.
