EUR/USD is trading around 1.1622, pulling back after encountering strong resistance near the upper band of the downtrend channel, and is consolidating around the 21-day SMA at 1.1622. As a result, we believe EUR/USD could continue its fall in the coming hours until it fills the gap around 1.1601 left at Friday's close.
The euro could find strong support around 1.1596. This area represents a critical zone for a technical rebound, as the euro has been bouncing above this level since May 19, and we expect an opportunity to open long positions with targets toward the 4/8 Murray line.
If bearish pressure prevails and the euro consolidates below 1.1596 and below the 3/8 Murray level, this could be seen as a signal to continue selling, with short-term targets toward the lower band of the downtrend channel around 1.1518.
The euro is expected to resume its uptrend in the coming days, but we could first see it fill the gap left on May 24. This could then be viewed as an opportunity to buy, with targets at 1.1622, 1.1674, and finally 1.1718.
A decisive break above the bearish channel and consolidation above 1.1630 could change the outlook for the euro, which could enter a new bullish sequence and reach the 5/8 Murray level around 1.1840 in the short term.
