EUR/USD traded higher during the European morning Wednesday, after it hit support near the 1.1825 level. That said, the rate continues to trade below the short-term downtrend line drawn from the peak of the 19th of April, and also below all three of our moving averages, which point south. Thus, for now, we will consider the short-term downtrend to be intact.
If the bears manage to take charge below the aforementioned downtrend line, then we may see them aiming for another test near the 1.1825 barrier. If they manage to overcome it, then we could experience extensions towards our next support zone of 1.1775, defined by the low of the 19th of December 2017.
Turning our attention to the short-term momentum studies though, we see that the RSI rebounded and exited its below-30 territory. The MACD, although negative, shows signs of bottoming. It could cross above its trigger line soon. What’s more, there is positive pergence between both these indicators and the price action. These technical signs suggest that the short-term down path is running out of steam and thus, we remain cautious as the recovery may continue for a while more, perhaps for a test near the crossroads of the trend line and the 1.1900 level.
If that territory does not prove strong enough to prevent the pair from drifting further up, then we may see a test near our next resistance barrier of 1.1940. A break above that hurdle could open the way towards the 1.1980 obstacle, or the psychological round figure of 1.2000.