The impulsive decline seen in early Europe has been recovered, thus marking another failure to sustain below 125.00, thus extending the ongoing squeeze between 125.0 handle and falling channel resistance.
A daily close back inside the channel would invalidate arguments to remain on the sell side, thus leading to short unwind resulting in the cross cutting through 127.17-127.28 barrier to test 128.38 levels.
A move back inside the channel would also add credence to the bullish daily RSI.
However, gains above 128 appear unlikely as of now as the monthly RSI is below 50.00 and pointing lower, indicating rallies to 128 and above could be met with fresh selling pressure.
Meanwhile, a daily close below 125.00, which now is also rising expanding channel would indicate the cross is going to have a relook at 122.05 (Mar 1 low).
Outlook – Short-term (next 2 months or so) jump to 128.00-128.50 is likely, where by fresh offers could hit the cross and take it lower to 122.05, which is breached shall shift risk in favor of a drop to 118.50 levels.