Early in the European session, EUR/USD was trading around 1.06 36, below the 21 SMA below the 200 EMA. On the H1 chart, we can see that the euro is trading within the bearish trend channel.
Yesterday during the American session, before the publication of the US interest rate data, the euro made a strong upward movement, reaching the top of the downtrend channel around 1.0733 (weekly high).
The euro failed to break through 1.0736 since 0/8 Murray is located at the same level with the top of the bearish channel, which acted as strong resistance. From that point, EUR/USD made a strong technical correction and is now located around the -2/8 Murray critical support.
This technical correction of more than 100 pips could offer a technical rebound in the euro in the coming hours. The key is that the pair may continue trading above -2/8 Murray in which it would give an imminent rebound and could be seen as an opportunity to buy.
The euro/dollar pair left a gap around 1.0727 which is still pending to be covered. So we believe that if the euro falls to 1.0620, this could be seen as an opportunity to buy as long as it consolidates above 1.0600.
If in the next few hours, the euro consolidates above the bottom of the downtrend channel, this could offer an opportunity to buy and could send the price toward the target of 1.0681 (-1/8 Murray) and 1.0728 (GAP).