While concerns over European sovereign debt persist, euro bulls have several technical reasons to be optimistic. Despite marking a fresh 2010 low, the EUR/USD's subsequent snapback continues to respect a key Fibonacci retracement on a closing basis (1.3486 - 61.8% of the March/December 2009 rebound). Moreover, today's marginal break of 1.3444 (last Friday's low) could now potentially mark a double bottom (above 1.3690 confirms).
Daily bullish RSI & MACD divergence and ongoing pressure of the 20-day MA suggests that the single currency is demonstrating tentative signs of a base against several major currencies (Japanese Yen, Swiss Franc, Norwegian Krone and Canadian Dollar).
Clearing the resistant 20-day MA (EUR/USD 1.3647, EUR/JPY 122.83, EUR/NOK 8.0853, EUR/CAD 1.4386, EUR/CHF 1.4654) is now required to stage further strength. Conversely, a sustained loss of the DXY's (US Dollar Index) 20-day MA at 80.32 could trigger an overdue correction.
