EURUSD Uptrend Pullback (Aug 26, 2016)

If the ceiling holds, EURUSD could pull back to the channel support at the 1.1150 minor psychological level.

Applying the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the support and 200 SMA dynamic inflection point. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside and the rally could continue.
 
The pair could also draw support from the 50% Fibonacci retracement level since this lines up with a broken resistance level. Also it is around the 100 SMA dynamic inflection point. Stochastic is already making its way up, which suggests that buyers are starting to regain control of price action.

The main event risk for this setup is Fed Chairperson Yellen's testimony in the Jackson Hole Symposium later today. An upbeat assessment of the US economy and hawkish remarks could keep Fed rate hike expectations in play for September and December, allowing the US dollar to post strong gains.

On the other hand, a cautious outlook could force the dollar to retreat on lower rate hike odds. Many are expecting Yellen to keep things balanced and refrain from stoking additional volatility in the financial markets.

In terms of data, medium-tier US reports such as the durable goods orders and initial jobless claims came in better than expected yesterday. Germany's Ifo business climate was weaker than expected at 106.2, down from the earlier 108.3 figure and worse than the estimated 108.5 reading. Germany's GfK consumer climate index is due today.

By Kate Curtis from Trader's Way