TSX jumps amid Fed rate cut hopes, ongoing U.S. government shutdown
The EUR/USD pair closed at 1.1799, with an intraday high of 1.1811 and a low of 1.1747. It extended its bullish recovery but now shows signs of stalling near short-term resistance after reaching overbought territory on momentum indicators.
Key Technical Observations
- Moving Averages Supportive: The 15-day moving average (1.1623) and 20-day moving average (1.1576) remain firmly bullish, sloping upward and acting as dynamic support zones.
- Trend Structure: Since bottoming in late 2024, the pair has maintained higher highs and higher lows. However, the latest candles show hesitation just below the 1.1800–1.1820 zone, suggesting a short-term consolidation risk.
- RSI Overbought: The RSI printed 73.98, well above the 70 threshold, signalling overbought conditions. This raises the probability of a pullback or sideways correction before any sustained upside continuation.
- Resistance Test: Price is struggling near the 1.1800 handle, where previous swing highs capped bullish runs.
Macro & Market Context
- USD Weakness (DXY Link): The dollar index remains suppressed near multi-month lows, providing a structural tailwind to the pair.
- ECB vs Fed Policy Divergence: The ECB’s hawkish tilt contrasts with growing expectations of Fed easing, adding euro support.
- Risk-On Sentiment: Global equity strength continues to favour cyclical and higher-yielding currencies, bolstering the EUR.
Key Levels to Watch
- Immediate Resistance: 1.1800–1.1820 (critical breakout zone).
- Next Resistance: 1.2000 (psychological barrier).
- Immediate Support: 1.1600 (moving average cluster).
- Deeper Support: 1.1500 (recent swing base).
Bias: Bullish but Cautious
The medium-term bias remains bullish, supported by trend and macro divergence. However, the overbought RSI and resistance at 1.1800 suggest the risk of a near-term pullback toward 1.1600–1.1650 before resumption higher.
The pair is in a buy-the-dip mode, but caution is warranted as the price is overbought. A clean breakout above 1.1820 would trigger bullish continuation toward 1.2000, while failure could mean a corrective retracement offering fresh long entries at lower levels.
