- EUR/USD spikes higher after Supreme Court decision
- But unable to sustain gains and reverses lower
- Key support at 50-day SMA and 61.8% Fibonacci
is edging lower after the post-Supreme Court decision gains failed to move beyond the 50% Fibonacci retracement of the January upleg at 1.1829. The pair is currently testing the 61.8% Fibonacci of 1.1769, which overlaps with the 50-day simple moving average (SMA), amid waning momentum in either direction.
The RSI has flatlined slightly below the 50 neutral level, while the stochastics are attempting to bounce above the 20-oversold mark, pointing to the presence of very weak upside momentum.
The US Supreme Court ruled on Friday that Trump’s reciprocal tariffs were an overreach of his executive powers. Trump responded by slapping new global tariffs of initially 10%, and then 15%, using the Trade Act of 1974, sparking fresh uncertainty about the level of duties US importers will have to pay. Nevertheless, the immediate dollar selloff was brief and the euro appears to be on the backfoot again.
If EUR/USD slips below the 50-day SMA, the next major support is likely to come from the 1.1670-1.1684 area, which corresponds with the previously congested level of the former and the latter being the 78.6% Fibonacci. Slightly lower, the 200-day SMA is flying above the medium-term ascending trendline, creating a potentially strong support zone around 1.1650. A breach lower would clear the way for the January low of 1.1576.
However, in the event of a recovery, EUR/USD would first have to overcome the short-term descending trendline before having a go at the 20-day SMA at 1.1839. A break above the 20-say SMA would bring into range the 38.2% Fibonacci of 1.1888, followed by the 23.6% Fibonacci of 1.1962.
On the whole, EUR/USD is likely to maintain its neutral short-term bias until there’s a break below the 50-day SMA or a climb above the short-term downtrend line. In the bigger picture, the pair would need to surpass the January peak of 1.2081 if it’s to maintain its bullish outlook.
