EURUSD has been trending higher after breaking past a long-term resistance level last week.

Price is trading inside an ascending channel visible on its 1-hour time frame and is currently bouncing off the resistance. 

This could spur a correction to the channel support at the 1.1550 minor psychological level, which is close to the 61.8% Fibonacci retracement level on the latest swing low and high. This also coincides with the 200 SMA dynamic support. 

Speaking of moving averages, the 100 SMA is above the longer-term 200 SMA on this time frame so the path of least resistance is to the upside. The 100 SMA is near the 38.2% Fib and mid-channel area of interest, which might also be potential support in a shallow correction. Stochastic has been on the move down but seems to be pulling up early. 

Economic data from the euro zone was not so impressive at the start of the week. Flash manufacturing and services PMI readings from the top economies were mostly below expectations, except for the French manufacturing PMI, leading many to doubt that the ECB can taper as early as September. 

The German Ifo business climate index is lined up today and a dip from 115.1 to 114.9 is expected. Another weaker than expected read could mean more losses for the shared currency as tapering expectations weaken again. As for the dollar, relatively upbeat PMI readings renewed some support ahead of the FOMC decision later this week.

The flash manufacturing PMI is up from 52.0 to 53.2, higher than the forecast at 52.3, while the services PMI held steady from an upgraded 54.2 figure. Existing home sales printed a dip to 5.52M. The CB consumer confidence index is due today and a fall from 118.9 to 116.5 is expected. 

By Kate Curtis from Trader’s Way