Yesterday, during the North American session, the euro (EUR/USD) managed to bounce from the low of 1.0380 to the high of 1.0600. In a single day, the currency was able to recover by more than 220 pips, which signals a potential continuation of its upward movement in the coming days only if it consolidates above the 200 EMA at 1.0536.
One factor in the strong bullish move in the euro was the US housing data which marked its biggest drop in 25 months. Weekly jobless claims also disappointed while the Philadelphia manufacturing index for June showed its first drop since May 2020.
On June 16, the eagle indicator reached the extreme overbought zone around 95-points when the euro reached the area of 1.0600. From that level we see a technical correction and now the euro is trading below the 200 EMA. It is likely to continue falling to the area of 2/8 Murray at 1.0498.
Since June 13, the eagle indicator has been giving positive signals and it is likely that if the oscillator remains above the uptrend channel, we could see a recovery of the euro in the coming days. For this, the euro should consolidate above 1.0500.
A close on the daily chart below 1.0498 and 1.0500, in line with the 21 SMA, will signal a continuation of the bearish movement, and the euro could fall towards 1/8 Murray at 1.0376.
For the euro to resume its uptrend, a consolidation above 1.0540 (200 EMA) is needed. The outlook will be positive for the euro above this level. In such a case, the currency could reach 3/8 Murray at 1.0624 and even the high of 1.0773, recorded on June 9.
Our trading plan for the next few hours is to wait for the euro to make a technical bounce around the 21 SMA at 1.0498 to buy. Conversely, a return above 1.0536 will be a signal to buy above the 200 EMA with targets at 3/8 Murray around 1.0620.
