Early in the American session, the Euro is trading around 1.0870, above 21, and within a bearish trend channel forming since December 27. The euro is bouncing after having reached 1.0812 during the European session, a level that coincided with the bottom of the bearish trend which gave it a strong technical rebound. EUR/USD could extend its rise in the coming hours if it consolidates above 1.0850.
Since January 16, we have observed the formation of the head and shoulders technical pattern in EUR/USD. If the instrument breaks sharply above 1.0905, it could confirm the projection of this pattern and the price could reach 2/8 Murray at 1.0986 and even the psychological level of 1.10. Finally, the currency pair could return to 3/8 Murray levels at 1.1108.
On the other hand, we expect that the euro will consolidate above 1.0850 in the next few hours. This is a key support level which could encourage EUR/USD to resume its bullish cycle with the target at the 200 EMA at 1.0904.
Technically, according to the eagle indicator, the euro produces a positive signal. Any technical rebound could be seen as an opportunity to buy only if EUR/USD consolidates above the key level of 1.0815.
