EUR/USD Price Analysis: Confirms a bullish flag breakout, move beyond 1.1900 mark awaited

• EUR/USD attracted some dip-buying on Wednesday and rally back closer to the 1.1900 mark.
• The disappointing ADP report weighed heavily on the USD and provided a strong lift to the pair.
• A sustained move beyond the 1.1905-10 region will set the stage for a further appreciating move.

The heavily offered tone surrounding the USD pushed the EUR/USD pair to the 1.1900 neighbourhood, back closer to one-month tops touched last Friday.

The US dollar weakened across the board following the disappointing release of the ADP report, which showed that US private-sector employment rose by 330K in July. The data validated Fed Chair Jerome Powell's dovish stance that they were some ways away from substantial progress on jobs. This, in turn, weighed heavily on the greenback and provided a strong lift to the EUR/USD pair.

From a technical perspective, the EUR/USD attracted some dip-buying in the vicinity of 200-hour SMA support, which coincided with the lower end of a four-day-old descending channel. Given the recent bounce from mid-1.1700s or multi-month lows, the mentioned channel constitutes the formation of a bullish continuation flag pattern on short-term charts. A sustained break through the channel resistance might have already set the stage for a further near-term appreciating move for the pair.

Meanwhile, technical indicators on hour/daily charts have been gaining positive traction and add credence to the constructive setup. Some follow-through buying beyond the 1.1905-10 region will reaffirm the positive outlook and prompt some technical buying. The EUR/USD pair might then aim to surpass the 1.1935-40 intermediate resistance. The momentum could further get extended and allow bulls to challenge the very important 200-day SMA, around the key 1.2000 psychological mark.

On the flip side, any meaningful pullback now seems to find decent support near the 1.1865-60 horizontal zone. Any subsequent slide might still be seen as a buying opportunity near the 1.1840 confluence region, comprising of 200-hour SMA and trend-channel support. A convincing break below will shift the near-term bias in favour of bearish traders. This, in turn, might turn the EUR/USD pair vulnerable to break below the 1.1800 mark and retest the recent swing lows, around mid-1.1700s.

EUR/USD 1-hour chart

Technical levels to watch