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The EURUSD pair has started to bounce after the FOMC meeting minutes, as risk-on sentiment starts to improve, and the US dollar index failed to crack the top of its yearly range again.
As it often the case, the EURUSD pair hit a new monthly low and then recovered. This is classic EURUSD behaviour in terms of historical recoveries, which often started with a brief price crash.
As I had been mentioning recently, the EURUSD pair was extremely oversold as it trades towards the worst levels in 18-month. And a dangerous time for both due to the pair being vastly oversold.
The daily RSI indicator for the EURUSD pair was at its most oversold since January 2020, and so was the weekly RSI. Similarly, the Stochastic and MACD on looked ripe to recover.
Near-term technical analysis clearly shows the importance of the 1.1610 region, if bulls can take-out this area, then a push back to the 1.1680 to 1.1700 area could happen. Failure here and the EURUSD pair could get smacked back to the 1.1550 area again.
Something that we haven’t seen happen towards is wholesale bearish sentiment towards the pair. At the moment, traders are not bearish towards the EURUSD, which is alarming.
The ActivTrader Market Sentiment tool shows that some 73 percent of traders are bullish towards the EURUSD. This is a mild 1 percent uptick since the very start of this week.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the EURUSD pair is at a critical juncture and is battling with the Ichimoku cloud, according to the Ichimoku indicator.
The bulls need to break past this area to have a clear shot of further price gains toward the 1.1660 and 1.1680 area. Upside failure hear would be very bad indeed for bulls.
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EURUSD Medium-Term Technical Analysis
Looking at the daily time frame a large price gap is open for further price gains if we look at the Tenkan-Sen line and the Kijun-Sen line of the Ichimoku indicator.
A series of daily price closes above the Tenkan-Sen line and we are likely to see an attempt at the Kijun-Sen line close to the 1.1680 area. If we break past post those areas, then watch for an attack toward the 1.1795 region or think cloud support.
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