EURUSD bounces above key support, setting up bullish momentum

The EURUSD moved lower after the ECB kept rates on hold, but cut inflation expectations. ECBs Lagarde expressed concerns about lower growth. However, she also said that she/they needed more assurance (and confidence) that inflation was indeed coming down.

Technically, the initial fall lower in the EURUSD did find support buyers ahead of the broken 38.2% retracement of the move down from the December high. That level comes in at 1.0864 (see red solid line on the chart above). The low price reached reached 1.0867 just above that level before stalling the fall.

Subsequently, the price snapped back higher. Getting back above the 1.0887 level (high price from two weeks ago) added to the upside momentum.

More currently, the price extended above its 50% midpoint of the move down from the December high at 1.09165 and moved to within a swing area between 1.09245 and 1.09322. Getting above that area would now be needed to open the door for another run toward the 61.8% retracement at 1.0969.

Conversely, when the downside, the risk for buyers would now be the 50% retracement level (at 1.09165). Yesterday the price moved up toward that level and found willing sellers. Now that the level has been broken, the level has switched from resistance to support.

So buyers are making a play after sellers had their shot. Watching 1.0916 for close support and a break above 1.09322 to add to the bullish bias.

This article was written by Greg Michalowski at Source