Early in the American session, EUR/USD is trading around 1.0668 above the 21 SMA, approaching the 200 EMA resistance. Yesterday, the US dollar weakened as it had been rising for several sessions. This was supported by the hawkish comments of the officials of the European Central Bank (ECB) that gave the pair a strong upward push.
The euro formed a falling wedge pattern since February 13. This pattern was broken which gave a clear signal to buy. If the euro continues its rise in the next few days, EUR/USD is likely to reach the area of 1.0742 and could climb to the high of 2023 at 1.1032.
A convincing move and daily close above the 200 EMA located at 1.0688 could open the door for further short-term gains, with the immediate target at 1.08, the high of February 14, and ultimately the psychological level of 1.10
Conversely, in case the Euro fails to consolidate above 1.0690, we could expect a technical correction towards the 3/8 Murray at 1.0620 and the instrument could reach the 21 SMA located at 1.0586.
The eagle indicator is in the extremely overbought zone around 95 points. This signals a highly probable technical correction in the next few hours towards the 1.0620 zone which could be seen as a signal to buy.
Our trading plan for the next few hours is to sell below 1.0688 (200 EMA) or wait for a technical correction at 1.0620 (3/8 Murray) or 1.0586 (21 SMA) to buy with targets at 1.0742 (4/8 Murray) and 1.0796.