EUR/USD Price Analysis: Pair pulls back after strong rally, signaling a technical correction

• EUR/USD slips to 1.0475 on Monday, pausing after last week's sharp rally.
• The pullback appears to be a technical correction, with key support levels in focus.

EUR/USD took a step back on Monday, edging down 0.15% to 1.0475 after last week's impressive rally of over 1.50% which marked four-day winning streak. The decline appears to be a natural breather rather than a structural shift, as technical indicators still favor the bullish trend. The pair remains comfortably above the 20-day Simple Moving Average (SMA), suggesting that dips might attract renewed buying interest.

Momentum indicators reflect a slight slowdown but do not signal an imminent reversal. The Relative Strength Index (RSI) has eased to 59 but stays in positive territory, indicating that the rally may not be over yet. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram remains flat with green bars, suggesting consolidation rather than a strong bearish move.

For bulls to regain full control, EUR/USD needs to reclaim 1.0500 and establish itself above this psychological level. On the downside, immediate support lies at 1.0450, followed by 1.0420. A deeper correction could see the pair retesting the 20-day SMA near 1.0400, where buyers are likely to step in.

EUR/USD daily chart