A short-term bullish scenario above 1.18 could form this week on EUR/USD, targeting 1.1850. It is here, though, sellers will perhaps anticipate a bearish presence, given the 200-day SMA connection.
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Against a basket of foreign currencies, the US dollar index added nearly 1 percent last week and touched four-month highs.
In the shape of three consecutive bullish candles, price overthrew resistance at 92.26 and the 200-day simple moving average, currently circling 92.56. This is likely interpreted as a bullish signal, with Quasimodo resistance at 93.90 targeted this week. Subsequent upside shines light on another layer of resistance at 94.65 (dovetailing with a 38.2% Fib level a 94.54).
With reference to trend on the daily scale, we have seen an upside bias in 2021 (secondary trend). Though since the index topped in March 2020, the primary trend has echoed a bearish tone, launching a series of clear-cut lower lows and lower highs.
Momentum, as measured by the relative strength index (RSI), is in the process of forming potential bearish divergence ahead of overbought territory.
Going forward, assuming buyers maintain position north of the 200-day simple moving average, Quasimodo resistance at 93.90 is likely to welcome price action this week.
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