EUR/USD Price Analysis: Defends critical daily support line amid light trading

• EUR/USD has found some support near 1.1540 prize zone.
• 21-DMA could challenge the road to recovery for the EUR bulls.
• The EUR sellers continue to target the yearly lows at 1.1524.

EUR/USD is looking to extend its rebound from two-week lows of 1.1535, as the US dollar is reversing Friday’s massive rally amid the improving market mood.

The greenback rallied hard on Friday, as the Fed’s rate hike expectations ramped on rising US price pressures, as showed by the US PCE Price Index. The month-end buying into the dollar also boded ill for the major.

Meanwhile, dovish ECB and mixed Eurozone macro news weighed negatively on the euro. Attention now turns towards the US ISM Manufacturing PMI data and the sentiment on Wall Street for fresh trading impetus. Note that most major European markets are closed in observance of a public holiday.

Looking at EUR/USD’s daily chart, the price is bouncing off the rising trendline support, connecting the yearly lows of 1.1524 and Friday’s low of 1.1535, at 1.1538.

If the recovery momentum picks up pace, then the horizontal 21-Daily Moving Average (DMA) at 1.1597.

Further up, the 1.1650 psychological barrier will come into play.

The 14-Day Relative Strength Index (RSI) is edging higher towards the midline, currently at 42.93, suggesting that the downside remains intact while the leading indicator stays below the 50.00 central line.

EUR/USD: Daily chart

Alternatively, a daily closing below the aforesaid support line will threaten the 2021 low of 1.1524.

The next stop for EUR sellers is seen at the 1.1500 round figure. On selling resurgence, the July 2020 levels around mid-1.1400s will be tested.

EUR/USD: Additional levels to consider