EUR/USD: the pair rises sharply, is this a reversal or just an opportunity to sell?

After hesitating in the face of overall bearish pressure during yesterday's trading, the eurodollar began to move higher on Monday night, breaking above the psychological threshold of 1.08 and accentuating its gains to a peak of 1.0877 on Tuesday morning.

The improvement in the situation regarding the coronavirus pandemic in Europe, with declining death counts in Spain and France did indeed seem to reassure investors.

Profit-taking on the USD, which had risen sharply last week, also helped to push the eurodollar pair higher.

We can also assume that the optimism generated by the rise in oil prices, in the face of hopes that global production will be drastically reduced, perhaps as early as this week following Thursday's OPEC+ meeting, is also contributing to investors' optimism.

However, optimism reduces the importance of the USD's role as a safe haven, giving the EUR an advantage.

From a technical analysis point of view, it is worth noting that the break above the 100-hour moving average (1.0859) is a positive signal, but it may be more complicated to break above the psychological threshold of 1.09.

If the eurodollar manages to do so, the 200-hour moving average at 1.0939 will come into play.

On the downside, the recently broken 100-hour moving average becomes an immediate support, before 1.0849, then 1.08, and Tuesday's lows around 1.0769.

At this stage, a bullish reversal of the underlying trend becomes increasingly likely, but there is also a non-negligible risk that this may ultimately prove to be a trap for buyers... Caution therefore remains the order of the day for the time being.

Lastly, as far as the economic calendar is concerned, no key events are expected today, neither in the EU nor in the U.S. The first key event of the week will take place on Thursday, with the release of the minutes of the latest Fed meeting, which should provide details on the latest Fed's emergency rate cut.

Currently, the eurodollar pair is trading at 1.0907 on the forex.

Hourly eurodollar pair chart