EUR/USD Price Analysis: Upside momentum loss favors volatility contraction ahead

• EUR/USD is consolidating in a wider range of 1.0593-1.0736 after ECB-inspired volatility.
• The 200-period EMA at 1.0570 is sloping north, which indicates that the long-term trend is still solid.
• A range shift by the RSI (14) into the 40.00-60.00 gamut is signaling a consolidation ahead.

The EUR/USD pair has sensed selling pressure around the immediate resistance at 1.0660 in the Tokyo session after a firmer recovery move from the crucial support of 1.0600. The Euro bulls have not displayed sheer volatility akin to other risk-sensitive currencies amid a broader negative market sentiment after the monetary policy announcement by the Federal Reserve (Fed).

It looks like hawkish policy guidance by the European Central Bank (ECB) President Christine Lagarde has safeguarded the Euro from a risk-off market mood. At the press time, the US Dollar Index (DXY) extended its correction to near 104.30.

On an hourly scale, the major currency pair is consolidating in a wider range of 1.0593-1.0736. The wilds gyrated move was inspired by ECB’s hawkish policy guidance as an interest rate hike by 50 basis points (bps) was already expected. Usually, a wild move is followed by volatility contraction as the asset gets busy preparing the ground for further decisive action.

The 200-period Exponential Moving Average (EMA) at 1.0570 is sloping north, which indicates that the long-term trend is still solid.

Meanwhile, the Relative Strength Index (RSI) (14) has slipped into the 40.00-60.00 range from the bullish range of 60.00-80.00, which indicates a loss in the upside momentum.

Going forward, a break above Thursday’s high at 1.0736 will drive the asset toward May 30 high at 1.0787 followed by the round-level resistance at 1.0800.

On the flip side, a break below Thursday’s low at 1.0593 will drag the major currency pair toward December 7 high at 1.0550. A breakdown of the latter will expose to the asset for more downside near the psychological support at 1.0500.

EUR/USD hourly chart