The euro is trading around 1.1404, rebounding after hitting a low of 1.1370 on Friday. Since Friday's close and the start of trading this week, the euro has left a gap, and it is likely that after reaching strong resistance, EUR/USD could undergo a technical correction to fill that gap.
The euro could face strong resistance around 1.1407; this level could put pressure on the euro again, and it could continue its downtrend until it fills the gap it left around 1.1371.
A decisive break above 1. 1415 and consolidation above the downtrend channel could be seen as a positive signal to continue buying the euro, with targets at the 200 EMA around 1.1452, the 6/8 Murray level around 1.1474, and finally at the upper band of the channel around 1.1517.
Given that the euro is currently within a downtrend channel, we believe that below 1.1415, it could continue to fall and consolidate around this area in the coming days.
A technical bounce above 1.1370 could be seen as a positive signal, and we could resume long positions. EUR/USD is moving within an uptrend channel formed since June 22. Buying above this area could work in our favor.
If downward pressure prevails and the euro consolidates above 1.1352, this area is also viewed as strong support, and we could expect the euro to remain above this level in order to buy. Technically, we expect the euro to return to 1.1450 in the coming days and eventually reach the psychological level of 1.15.