April 15 (Reuters) - As stock markets recover, the rush for safety that has supported EUR/USD is ebbing, reducing support for the euro and highlighting the stretched nature of its rally.

Although bullish technical indicators can support larger gains expected after breaking important upside levels, it is necessary to correct an extremely overbought situation before this can happen.

Despite the uncertainty created by the trade war, the rebound in stocks, with major indexes within 10% of all-time highs, will reduce the desire to seek safety.

Without that support, there is a much stronger chance of a pause in the EUR/USD rally, where traders may book profits and overbought conditions could be alleviated.

Dips may be shallow and need to be so for technical factors to become the main drivers of bigger gains, with correction targets at 1.1300 and 1.1191 as the likely downside limits.

A bullish 'Golden Cross' signal is imminent, where the 55-day moving average (DMA) rises above the 200-DMA, potentially spurring a rally toward 1.1745, which is the next correction target for the slump caused by the U.S. tightening cycle.
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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)