EUR/USD to make a technical correction in the near-term

EUR/USD has managed to build on Monday's gains and broke above 1.07. However, the pair remains technically overbought in the near term, suggesting that there could be a technical correction before the next leg higher, FXStreet’s Eren Sengezer reports.

EUR/USD could extend its rally after 1.07 is confirmed as support

“The Relative Strength Index (RSI) indicator on the four-hour chart stays in the overbought territory above 70. Hence, buyers might wait for the pair to correct its overbought conditions before adding to long euro positions.”

“On the downside, 1.07 (psychological level, static level) aligns as first support. If buyers manage to defend this level, the pair could regain its traction and test 1.0740 (daily high, static level) before targeting 1.0780 (static level) and 1.0800 (psychological level).”

“With a four-hour close below 1.07, EUR/USD could extend its correction toward 1.0670 (static level) and 1.0640 (200-period SMA).”