Early in the American Session, the euro (EUR/USD) is trading around 1.0834, above 1/8 Murray, and below the 200 EMA located at 1.0864. The euro has been bouncing within the downtrend channel forming since early March.
After reaching the key level of 1.0803, EUR/USD is showing signs of recovery but could encounter difficulties as there is strong resistance around 1.0864 where the 2/8 Murray and the 200 EMA converge.
Given that there is strong bearish pressure on the euro, this current bounce that we are seeing could be used as an opportunity to sell in case the EUR/USD pair has difficulty breaking above 1.0870.
If this scenario occurs and the euro falls below this area, we could sell EUR/USD with the target at 1.0803. If the bearish pressure overcomes this area, we could sell, projecting the next target around 0/8 Murray at 1.0742.
On the contrary, the euro could resume its bullish cycle as long as it consolidates above 1.0925. Exceeding this level could mean a change in the trend. Hence, EUR might quickly rise to 1.096 and from there climb to the psychological level of 1.10.
Given that the euro has strong resistance at 1.0925, it could be seen as an opportunity to sell if it fails to overcome this last level. Since EUR/USD is within the bearish channel, we could project the target at 1.0740.
