EUR/USD showed signs of recovery after two days of decline, trading around 1.1810 during Asian hours on Tuesday. Looking at the daily chart, it appears the pair is slightly under the ascending channel pattern, hinting at a potential bearish reversal. Still, if it manages to return to that channel, the bullish outlook could be reinstated.
Currently, EUR/USD sits above the 50-day exponential moving average (EMA), but just under the 9-day EMA, which could limit immediate gains. The short-term average remains above the medium-term one, supporting a bullish sentiment. The rising 50-day EMA adds to the trend structure, but the flattening 9-day EMA might cap further upside until it recovers.
The 14-day Relative Strength Index (RSI) shows a neutral position at 53, maintaining a solid reading from previous days, which suggests improving momentum.
The first resistance level to watch is the 9-day EMA at 1.1836. If the pair closes above this average, it would reinforce an upward move into the ascending channel. A successful return could enhance the bullish sentiment and support EUR/USD in testing new highs, potentially around 1.2082, the highest level seen since June 2021. Continued strength might push the pair towards the upper limit of the channel at approximately 1.2290.
On the flip side, if EUR/USD falls, it could test the 50-day EMA at 1.1737. A breach below this average would heighten the risk toward the two-month low of 1.1578, reached on January 19.
