As today’s European session approaches, the EURUSD pair is trading around the 1.2408 mark (+0.02%). This is almost the same level at which trading closed at the end of the US session on Friday.
Today’s European session will pass without any major economic news. The US session will also be rather sluggish given that today is President’s Day and as such, banks will be closed.
On the longer timeframes, the EURUSD pair is in an interesting position. A doji candlestick is forming on the monthly timeframe around the downwards trend line:
This suggests that on the monthly timeframe, the euro isn’t strong enough to continue its surge against the dollar. The formation of a doji marks this as a potential reversal level and the downwards trend line is going to provide some serious resistance to the EURUSD pair’s upwards dynamic.
On the daily timeframe, a bearish engulfing pattern appeared at the end of last week:
A bearish engulfing pattern can often signal a potential reversal.
The likelihood of the euro’s surge fading away is confirmed by the fact that the bearish engulfing pattern, formed on the daily timeframe, is located within the confines of the double top, which has formed on the hourly timeframe:
All the above factors suggest that the euro is running out of steam in its upwards dynamic against the dollar.