Amid ongoing optimism in equity markets driven by the U.S.–Japan trade deal, the dollar index fell by 0.18% yesterday, while the euro rose by 0.16% (16 pips).
The price has now consolidated above the MACD line. This opens the possibility for the euro to target the upper boundary of the price channel at 1.1834. However, we remain cautious, as the Marlin oscillator is turning downward, and reversal patterns are already forming on the lower timeframe charts. The breakout above the MACD line may be a false signal.
Moreover, the euro's optimism is not supported on the weekly chart. A divergence is present, along with significant doubt about the price's ability to overcome strong linear resistance levels.
On the four-hour chart, a weak divergence has formed. It could be invalidated, but until that happens, there remains a risk that the price will fall to the support of the MACD line near the 1.1675 level. A consolidation below the MACD line would open the path toward the 1.1535 target.
