EURUSD Countertrend Setup (Apr 26, 2017)

If this area keeps gains in check, the pair could head back to support at the 1.0700 major psychological level or at least until the mid-channel area of interest.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the resistance is more likely to hold than to break. The moving averages are close to the bottom of the channel, adding to its strength as a potential floor. Stochastic is already in the overbought zone, which means that buyers might already be exhausted and willing to let sellers take over.

There are no major reports due from the euro zone today so the main event risk might be Trump's tax reform announcement. If market watchers are unimpressed by the details or likelihood that the changes will be implemented by the end of the year, the dollar could wind up giving up more ground against its counterparts. Data from the US turned out mixed recently, with housing data coming in stronger than expected and consumer confidence falling short.

As for the euro, the optimism after the first round of the French elections continues to keep the shared currency supported. To top it off, polls continue to show a widening lead in favor of Macron, lowering the odds of a Le Pen victory and a Frexit.

By Kate Curtis from Trader's Way