EUR/USD Updates: Swing traders should note over extended weekly conditions

EUR/USD rallied some 2% since the prior resistance at the end of November on US dollar weakness. The greenback had attempted a correction but was capped in the DXY at the 10-day moving average and is threatens a break below 90.50 again.

However, the euro is in stretched conditions from a longer-term perspective which would be expected to limit the upside potential for the time being.

Zooming in to the weekly chart, we can see that there could even be scope for a run to the 61.8% Fibo which meets the 21-week moving average and a thicker pool of liquidity.

From the daily chart, a test of the marked support would result in an M-formation and likely see a bid back to the prior support, turned resistance.

It will be from there which could offer the next downside extension to the 61.8% Fibo or a prolonged period of consolidation.

In the shorter term, bulls could look for an opportunity from the 38.2% to target the M-formation's neckline.