EURUSD is starting to trend higher on its 1-hour time frame, moving inside an ascending channel and just coming off a bounce from resistance. A pullback to the channel support at the 1.0750 minor psychological level could take place.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the 200 SMA lines up with the channel support, adding to its strength as a floor. Price seems to be breaking below the near-term dynamic inflection point at the 100 SMA to indicate a bit of selling pressure.
Stochastic has already reached the oversold area, which means that sellers are already getting exhausted. Once the oscillator pulls higher, buyers could gain more traction and trigger a bounce back to the channel resistance past 1.0800 or at least until the recent highs.
Dollar traders seem to have been disappointed by Congress’ decision to postpone the vote on the healthcare bill since they weren’t able to gain enough support. According to the Freedom Caucus, they cannot make a decision based on the current form of the new bill since they want a broader repeal of Obamacare.
Discussions could continue in Washington and the uncertainty could weigh on dollar demand. After all, this vote is seen as a test of the Trump administration when it comes to their strength in pushing their agenda through Congress, which would set the tone for their future policy changes like tax reform and financial deregulation.
As for the euro, PMI readings from the manufacturing and services sectors of France and Germany are lined up today. Apart from that, polls continue to show a lead for Macron, which is bullish for the euro because it eases concerns of a victory by pro-Frexit Le Pen.
By Kate Curtis from Trader’s Way