- Summary:
- EURUSD squeezes higher ahead of the FOMC decision later in the North American session. Bearish divergence and rising wedge call for caution.
The EURUSD pair jumped above 1.22, in another leg higher, destined to squeeze shorts even more. The pair trades at its 2020 highs, and, at this pace, it is on track of advancing even more as the Fed is expected to ease the financial conditions in the United States further.
Today’s new leg higher on the EURUSD came at the time that the Eurozone PMIs surprised to the upside. However, if we check the other currency pairs on the FX dashboard, we see that the move higher is exclusively seen on the EURUSD. For example, the EURGBP, EURAUD, or the EURJPY crosses did not follow.
EURUSD Technical Analysis
It is hard to buy the EURUSD here. The pair formed a rising wedge, and the recent leg higher pierced the upper trendline. On top of that, there is a huge bearish divergence with the RSI. As such, the ideal setup is bearish, but only after the market moves a bit to the downside.
Therefore, bears should wait for the price to break below the rising blue line before going short with a stop-loss order at the highs. On such a move, the take profit should be set at half the distance of the entire wedge, but that is too much considering the time of the year we are in. Therefore, look for a 1:2 risk-reward ratio, should the EURUSD breaks lower.
Dow Jones Daily Chart
