Yesterday, when the US and UK had a holiday, the euro cautiously tested the resistance of the nearest descending price channel line and ended the day lower. It appears that the bears are struggling to maintain pressure on the quotes.
According to our main scenario, when the US government makes the final decision to raise the debt ceiling (tomorrow, as the lower house of Congress approves it today), the dollar will advance against all global currencies. However, this scenario has a visible pitfall – the desire of major players to eliminate premature dollar bulls. In this case, the euro may rise to the target level of 1.0804.
On the other hand, if investors expect long-term strengthening of the dollar, initiating a move with a preliminary upward price spike of just one figure may not be a very effective endeavor. Historically, false movements of the euro against news of debt limit increases have occurred intermittently. It is difficult to predict how things will unfold today.
Even from a technical perspective, the small convergence on the daily chart indicates both a potential minor correction and its possible breakdown due to strong news.
On the four-hour chart, the price is getting closer to the MACD indicator line, from which a downward reversal may occur, or with the assistance of the Marlin oscillator, which is ready to enter the positive territory, the price could climb to the target level of 1.0804 (February 14 and May 24 highs). The MAcD line (1.0738) coincides with the price channel line on the daily chart, making it a strong level. There is a certain probability that the euro will decline without a preliminary corrective rally.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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