EUR/USD bounced this week, but bulls need to see more to suggest

The world’s most widely-traded currency pair has had a relatively rough go of late, falling nearly 400 pips from its early September peak to this week’s low before finding a floor and bouncing back into the weekend. The pair did show a bullish divergence with its 14-day RSI indicator at the recent lows, signaling waning selling pressure and the potential for a counter-trend rally.
That said, the longer-term fundamental headwinds from a relatively slow-to-normalize European Central Bank and the ongoing energy crisis hitting consumers’ pocketbooks throughout the continent.
In the short-term, the key level to watch will be 1.1625: As long as the pair remains below that level of previous-support-turned-resistance, the recent bearish bias remains intact for a potential drop to the 50% Fibonacci retracement of the 2020 rally at 1.1500. On the other hand, a break through that barrier could point to a continuation of this week’s counter trend rally, with room up toward 1.1700 before encountering more resistance.