The EUR/USD pair has started its bullish momentum after it hit the critical support level at 1.05697.Most of the professional long-term investors went long at that level and made a decent profit by riding the medium term bullish trend. However, the bulls were exhausted after the pair hit the critical resistance level at 1.20916.Prior to the third U.S rate hike decision, the optimistic dollars bulls managed to push the pair down below 100 days SMA on the daily chart. Despite the third rate U.S rate hike, the EUR/USD pair found some solid support near the 38.2% Fibonacci retracement level drawn from the low of 201st June 2017 to the high of 11th September 2017.
EUR/USD daily chart analysis
Figure: EUR/USD pair bouncing off the off from 38.2% Fibonacci retracement level
From the above figure, you can clearly see that the bulls managed to hold the price just above the critical support level at 1.17237.Though we had a bullish engulfing pattern right at the 38.2% Fibonacci retracement level, most of the conservative investors failed to place their long orders due to pending rate hike decision. But still we might get a second chance to place our trades, so look for a minor bearish retracement in price in your fx trading platforms. Currently, the EURO bulls are testing the 100 day SMA to establish its bullish momentum. A daily closing of the price below the 100 days SMA will ultimately lead this pair towards the next critical resistance level at 1.19599.From that level, we might see some bearish correction but ultimately the pair is most likely to head towards the high of 11th September 2017.This level is going to play a major role in the next movement of the EUR/USD pair since a clear break of the major resistance level at 1.20916 will confirm the establishment of the medium term bullish trend in the daily chart.
On the downside, we have the daily bullish trend line support level at 1.17198.This level is going to provide a significant amount of buying pressure to the EUR/USD pair and most of the expert investors will look for bullish price action confirmation signal to place their long order. However, a daily closing of the price below the 38.2% Fibonacci retracement level will confirm the breach of medium-term bullish trend line support. In that case, the next bearish target for the EUR/USD Pair would be the 50% retracement level at 1.16075.If the 50% retracement level fails to cap the bearish momentum in EUR/USD pair then the ultimate target would the 61.8% retracement. The critical support level at 1.14836 is going to play a major role since a daily closing of the price below that level will confirm the end of a recent medium-term bullish trend. The sellers are most likely to take full control of the market once it clears the 61.8% retracement level.
Fundamental factors
In the last week FED has already hiked their interest rate on the basis of 25 points but still, the U.S dollar index which measures the overall value of the green buck’s strength against the six majors has not been able to establish a firm bullish trend. The pending U.S tax cut policy and an unclear statement from FED chairperson Janet Yellen clearly demonstrate the U.S economy is struggling hard to recover their loss. However, if the U.S central bank manages to adjust their currency inflation rate problem then we might see a stronger dollar in near future. Fundamentally we don’t see any strong bullish surge from the green buck’s bulls to push the price of EUR/USD pair lower.
Considering all the technical and fundamental analysis, the overall bias for the EUR/USD pair remains bullish for the upcoming days. So any bullish price action confirmation signal will be good opportunity to place long orders to make short time profit. On the contrary, if ECB president Mario Draghi comes up with a hawkish statement then the EURO bulls will easily clear the high of 11th September 2017.