EUR/USD is trading near 1.1966 – a fresh high in 2020, and its Relative Strength Index is in overbought territory. The traders are looking forward to the release of minutes from the Federal Open Market Committee, today.
EUR/USD Rally Hits RSI Overbought Reading
The pair has been on a bull run for the past eight weeks and is on track to post the longest weekly stretch of gains since 2004. FOMC minutes will have a significant impact on the EUR/USD in the coming days. Relative strength index is above 70 for the fourth time this year and has been on an upward trend since March.
Fed Chairman Jerome Powell hasn’t shown any indication of being in a rush to alter the present monetary policy course. So, the extreme reading in the RSI might further the upward bias of the EUR/USD.
The FOMC minutes might have dovish forward guidance as the agency aims to increase holdings of Treasury and mortgage-backed securities at least at the current phase. Also, the US Dollar liquidity swap lines unveiled in March to ease the strain in global funding markets can continue to pressure the greenback, thus strengthening the EUR/USD up-move.
The crowding behaviour in the dollar might persist as the retail traders were bearish on EUR/USD since mid-May, even though the Fed uses asset purchases and lending facility to support the economy.
Nevertheless, the EUR/USD will be trading strong ahead of the FOMC Minutes and might test 1.1996, the May 2018 high.