EUR/USD bulls are holding firm as the pair continues forming a longer-term base for a possible move higher.
The recent slide to the 1.1530/50 zone support stalled and the ensuing bounce brought EUR/USD back above the 21-DMA and 38.2 Fib of the 1.1301-1.1734 rally.
The rebound has derived support from the possibility of a reduction in Italian budget tensions nL5N1VR2DH.
Yields on Italian government debt nose-dived after officials attempted to reassure markets over fiscal plans.
That in turn led to tighter DE-IT and DE-U.S.
The tightening has helped lift EUR/USD towards the 55-DMA and contributed to the formation of a long lower wick on today's candle.
Bulls should feel assured the pair is basing as long as the 1.1530 support area holds.
A break below there will probably usher in a return to the 2018 low.
If EUR/USD extends recent gains, a break above the daily cloud and August high could squeeze shorts hard.
The door to 1.1850/60 resistance and 200-DMA would then open.
chart: Click here