After the softer US CPI data on Tuesday, EUR/USD buyers were in a relatively comfortable spot and one would think a more hawkish ECB tilt yesterday would be enough to solidify the potential breakout to the topside in trading this week. But here we are, with price down 0.1% to 1.0610 levels today and the euro might just end up falling short in clearing the final hurdle.
The two key technical levels to watch ahead of the weekly close will be the key trendline resistance (white line), seen roughly at 1.0585 currently, and the 38.2 Fib retracement level of the swing move lower from January last year, seen at 1.0610.
Buyers tried to make a play to secure a break above both key levels but are now facing a big challenge to keep hold of it as we look towards the end of the trading week.
Failure to hold a firm break above the levels mentioned will be a massive blow to the momentum after the optimistic surge to begin with, and after having tried to come up above 1.0700 yesterday.
The hourly chart shows how buyers are now really being tested, with the 100-hour moving average (red line) in play again after yesterday's defense:
If the near-term level gives way, that will open up scope for sellers to try and take a run at the 200-hour moving average (blue line) next with the key trendline resistance (white line) seen in between that.
This will be a major focus for the dollar as well before the weekly close as if the breakout fails and fizzles, it will vindicate a potentially stronger reversal for the dollar going into next week.
