The EURUSD currency pair recently rallied up to test the resistance of a falling trendline visible on the 4-hour chart timeframe. However, the pair has since pulled back from its high around the 1.0884 level.
Traders will be watching to see if the EURUSD can muster enough strength for another push higher to retest that trendline resistance area in the coming days. A clear breakout above the trendline would be a bullish signal, potentially indicating that the prior downside move from the 1.0981 high has completed already at the 1.0724 low.
If the EURUSD can break and hold above trendline resistance, it would open the path for a further rally towards the 1.0940 region initially. Any move beyond 1.0940 could then target a retest of the previous 1.0981 high from a few weeks ago.
However, the bearish scenario would remain in play if the trendline resistance continues to hold firm. In that case, the bounce off the 1.0724 low could be seen as merely a correction within the broader downtrend from the 1.0981 high. Failure at resistance could precipitate another leg lower targeting the 1.0700 handle next.
In the near-term, the first key support level to watch is at 1.0790. A breakdown below 1.0790 would increase the bearish pressure and clear the way for a test of the more significant 1.0700 support zone.
The EURUSD finds itself at an important technical juncture. Traders will want to watch price action around the falling trendline resistance to gauge whether the overall trend will remain bearish or if a more significant bullish reversal could be underway.