Synopsis:

Bank of America warns that the stretched weekly RSI on EUR/USD—now overbought for a sixth time—historically signals a pause or correction, even as they maintain a bullish long-term trajectory toward 1.18–1.20 by early 2026.

Key Points:

• Historical RSI Pattern Signals Risk:
  • EUR/USD weekly RSI is overbought for the sixth time, with the last five instances followed by corrections lasting at least a month.
  • BofA notes that the latter stages of rallies tend to be choppier, citing 2H23 as precedent.

• Trend Still Intact:
  • The long-term bullish view from the double bottom in Jan–Feb remains in place.
  • Target remains the 1.18s or the 200-month SMA near 1.20 by February 2026.

• Short-Term Setup:
  • Watching closely over the next few weeks for signs of a short-term top or spike, which could lead to a Q3 correction in both momentum and price.

Conclusion:

While BofA maintains its medium- to long-term bullish bias, the overbought RSI and historical pattern suggest EUR/USD may face a corrective pullback in Q3 before resuming its uptrend.