EUR/USD is trading below 1.2100, previously trapped in a narrow range, as the US dollar holds onto the recovery gains. While the upside has been capped around 1.2150, the bears are trying to push the pair below 1.2100, as markets await fresh catalysts.
From a technical perspective, this week's sustained move beyond a one-month-old descending trend-line favours bullish traders. However, the lack of any strong follow-through buying warns some caution for any further bullish move. The overnight positive move stalled near the 50% Fibonacci level of the 1.2350-1.1952 recent leg down, which should now act as a key pivotal point for short-term traders.
A sustained move beyond 1.220 coincides with the 61.8% Fibonacci which has the potential to lift the pair back his. The pair might then aim to test an intermediate resistance near the 1.2280-70 region before eventually aiming back to reclaim the 1.2300 round-figure mark.
On the flip side, weakness below the 1.2100 mark might now find some support near the mentioned trend-line resistance breakpoint, currently around the 1.2060 region. Failure to defend the resistance-turned-support will negate any near-term bullish bias and turn the pair vulnerable to slide to challenge the key 1.2000 psychological mark. The downfall could further get extended back towards monthly swing lows, around mid-1.1900s.
