Technical Analyst, Saxo Bank
Summary: EURUSD and the Dollar Index both turned around at the 0.786 retracement and now seem to be resuming their medium-term trends.
EURUSD could challenge April peak and key resistance at 1.1180
Dollar Index could test key support at 100.68
EURUSD closed back above 1.09 resistance. RSI closed back above 60 threshold meaning now back showing positive sentiment indicating likely higher EURUSD levels.
Similar to during the May sell-off that bounced from the 0.786 retracement at 1.0640 expect a correction from the 0.786 at 1.0997.
However, if EURUSD closes above the Cloud, and RSI is still above 60 showing positive sentiment, EURUSD is likely to test April peak around 1.1095.
Weekly RSI is indicating higher EURUSD level above April peak and a move to around the 200 weekly Moving Average and resistance at around 1.1180 should be expected.
However, a spike up to the 0.618 retracement and 1.382 projection of the June correction at around 1.1270 should not be ruled out.
For EURUSD to reverse this bullish a close below 1.0630 is needed.
The Dollar Index correction reversed from the 0.786 retracement at 104.70 to be send back below 100 and 55 Moving Averages.
RSI is below 40 i.e., showing negative sentiment, The Dollar index could be testing the key strong support at around 100.68 shortly.
Expect a minor bounce from the 0.786 retracement at around 101.40
If the Dollar Index closes below 100.68, it has spiked below on several occasions without closing below, there is further down side potential. Next support at around 98.63 and 97.44.
If the Dollar Index closes above 104.62 the potential bearish scenario is demolished and an uptrend has been established.
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