EUR/USD bounces off a 34-month low; nearby resistance may be more durable.
EUR/USD finally found some footing around a 34-month low of 1.0777 last week following the heavy sell-off from the beginning of the month, with the price strengthening towards the 1.0800 level on Friday.
The rebound, however, has not convinced traders yet that it is long-lasting as the price could not clear the 1.0862-1.0888 resistance area that kept the bulls under control last week. This is also where the 23.6% Fibonacci of the down-leg from 1.1238 to 1.0777 is located.
Technically, the pair could hold above its recent troughs in the short-term and attempt to break the aforementioned ceiling given the reversal in the RSI and the MACD. Should efforts prove successful, the rally may next pause within the 1.0925-1.0953 region formed by the 20-day simple moving average (SMA) and the 38.2% Fibonacci. Any further improvement could then open the door for the 1.1000 level and the 50% Fibonacci.
In the negative scenario, the 1.0777 level could come under the spotlight again if the bulls fail to close comfortably above 1.0888. Any leg lower may shift support towards the 1.0700-1.0650 restrictive zone last seen in the 2016-2017 period.
In the medium-term picture, the pair is likely to keep a downward direction as long as it trades below 1.0888.
Summarising, EUR/USD is expected to hold neutral in the short-term unless it overcomes the 1.0867-1.0888 wall.
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