EUR/USD technicians likely have the 1.1050 area targeted
May 24 (Reuters) -EUR/USD's fall from the May 16 high halted and reversed a bit Friday with help from improved risk sentiment, and traders who focus on technical signals may be expecting a much bigger rally.
The pair's corrective pullback neared the 1.0790-1.0815 area where structural support sits, as do the daily cloud top and the converging 21-, 55- and 200-DMAs.
Friday's rally has EUR/USD above the 10-daily moving averages but also helped keep in place the bull pennant on daily charts.
Daily RSI is rising again after unwinding its recent near overbought condition.
The daily technicals reinforce bullish monthly signals.
Monthly RSI is rising and is nowhere near overbought and EUR/USD traded above the rising 12- and 21-month MAs.
Should EUR/USD complete the bull flag pattern, another bullish signal will emerge suggesting January's 1.1047 monthly high could be tested. The rally is the measured move of the May 9-16 rally.
However, technical analysts will probably need fundamentals to cooperate.
The second estimates of Q1 GDP and Q1 PCE are due May 30 as are weekly claims data. April PCE will follow on May 31.
Below-estimate results could lead investors to expect a less hawkish Fed, which could sink yields and the dollar while rallying EUR/USD.
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(Christopher Romano is a Reuters market analyst. The views expressed are his own)
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