EUR/USD was one of the biggest gainers during Asian hours yesterday, but all that bullish bravado turn to naught as prices subsequently traded lower during European and US session, staying within a tight band between 1.3695 and 1.3710. To be fair, EUR/USD wasn't the only currency pair where bulls have failed; fellow classic risk currency pairs GBP/USD, AUD/USD and NZD/USD all traded lower as well, and the magnitude of their losses were much larger - all 3 currency pairs traded below the opening levels. On the other hand, even though EUR/USD has pared gains, prices only managed to stay in the black, suggesting that EUR/USD bulls may just be that much stronger compared to the rest of the currencies in the short-term.
Hourly Chart
EUR/USD Hourly" title="EUR/USD Hourly" height="242" width="474">
Another good bullish factor going for EUR/USD for now is that prices has stayed mostly above 1.37. Today we've seen prices pushing below 1.37 but prices have since recovered. As such, even though technicals suggest that a push towards 1.368 is possible following the failure to break 1.3715 and the bearish break of the rising trendline, prices have a good likelihood of staying afloat around 1.37 mark, opening up the possibility of a push towards 1.3715 once more.
Daily Chart
EUR/USD Daily" title="EUR/USD Daily" height="242" width="474">
Daily Chart is less optimistic, as the failure to move beyond 1.37 conclusively suggest that a top may be in place, which opens up a move back lower with an ultimate bearish target of below 1.348 as the bearish trend that has started in late December 2013 will be back in play. Stochastic readings agree with Stoch curve already deeply Overbought. Furthermore, it should be noted that there is a divergence between price and stoch peaks, suggesting that current bullish recovery from early Feb may be overly aggressive, increasing the likelihood of a pullback.
Looking at the economic news calendar, there isn't any major European economic news that could fuel further gains in EUR/USD. As such, the only reason why EUR/USD can possibly climb higher moving forward would be inherent bullishness and technical pressures. Even though EUR/USD has been doing better than other currencies, it should be noted that yesterday was a broadly "risk on" day which saw global equities indexes from Asia and Europe all climbing higher (Bank holiday in US). Hence, the failure to see gains for risk currencies as a bloc is disconcerting, and we can conclude that there is a larger bearish sentiment at work (possibly relating to USD strength) that can still drag EUR/USD lower.