EURUSD Uptrend Correction (Aug 22, 2016)

The Fib tool applied on the latest swing high and low shows that the 61.8% retracement level lines up with the trend line and an area of interest at 1.1200.

The 100 SMA is above the 200 SMA so the path of least resistance could be to the upside. Also, this short-term SMA is near the rising trend line, adding to its strength as potential support.

However, stochastic is still on the move down, which suggests that sellers might still be in control of price action. Once the oscillator reaches the oversold region, buyers could reestablish their long positions.

Event risks for this week include the euro zone flash PMI releases from the region's top economies tomorrow. Improvements could reassure traders that the region isn't so worse off following the Brexit vote, reviving confidence that the ECB might be able to refrain from doling out additional stimulus.

As for the US dollar, durable goods orders data are due midweek ahead of the Jackson Hole Symposium. Expectations for Fed head Yellen's speech could drive price action of dollar pairs, including EURUSD.

Last week, the FOMC minutes revealed that policymakers still generally preferred to be prudent in waiting for more data before adjusting policy. However, a number of Fed officials expressed their hawkish sentiments, keeping expectations live for a September or December hike.

By Kate Curtis from Trader's Way