EUR/USD rose on Friday, remaining buoyant a day after the ECB shrugged off currency strength by saying it didn't target the euro rate nL8N2G73PL, which has reinforced support even though downside risks remain.
EUR/USD has been unable to break free of the 10- and 21-day moving averages, while monthly RSI implies that longer-term momentum remains bearish and daily RSI is nearing overbought territory again.
Daily charts show the right shoulder of a possible head-and-shoulders top building.
Those signals suggest a test of key support in the 1.1685/1.1710 region is likely.
That support zone is formidable, though, and is being reinforced.
The 23.6% Fibo of the March-September rally, August monthly low and August 12 daily low are existing support but the daily cloud top is now added to that support while the rising 55-day moving average will enter that zone early next week.
With that support zone becoming more significant, a break of it is likely an indication a deeper correction is due.
A break of that support could lead to a large reduction in massive net-long euro positions nL1N2G11RM, which could drive EUR/USD towards 1.1475/1.1525 support.
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