EUR USD rallies towards resistance

EUR/USD (daily chart shown below) has rallied on a rebound for the past week that has lifted the currency pair from a key support area around 1.0800 up to a key resistance area around 1.1400.

This rebound occurs as EUR/USD has struggled for the past three months to rise and recover from its 12-year low below 1.0500 that was hit in mid-March.

Prior to the current rebound towards 1.1400 resistance, the currency pair spent the latter part of May plunging sharply from the same resistance area on a resurgence of US dollar strength.

Despite the current rebound, the major downtrend extending back to last May’s 1.4000-area high is still solidly intact, as the currency pair continues to trade well below its 200-day moving average.

Any sustained rebound that pushes EUR/USD above 1.1400 should meet major resistance around this 200-day moving average as well as the key 1.1650 level.

To the downside, any substantial retreat from the current resistance could restore bearish momentum and push the currency pair back down towards its support targets at 1.1100 and 1.0800.

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