EUR/USD Price Analysis: Recovery needs acceptance above 21-DMA

• EUR/USD prints fresh 2021 lows on Friday then rebounds.
• EUR buyers need validation above 21-DMA to unleash further recovery.
• A daily closing below 1.1512 will revive the downtrend in EUR/USD.

EUR/USD is holding onto Friday’s solid comeback from fresh 2021 lows of 1.1513 starting out a fresh week.

The sharp sell-off in the US dollar alongside the Treasury yields, in the face of the Fed’s patient stance over the rate hike prospects, knocked down the US dollar vs. its major peers, aiding EUR/USD’s recovery.

Attention now remains on the US Consumer Price Index (CPI) data and Fedspeak due on the cards this week for fresh trading direction in the main currency pair.  

From a short-term technical perspective, the pair will face stiff resistance at the horizontal 21-Daily Moving Average (DMA) at 1.1599 on its road to recovery from multi-month troughs.

If that is cleared on a sustained basis, then the EUR buyers will look to take out the previous week’s highs at 1.1616.

Further up, the downward-sloping 50-DMA barrier at 1.1669 will be next on the bulls’ radars.

EUR/USD: Daily chart

The 14-Day Relative Strength Index (RSI), however, remains below the midline, suggesting that the recovery attempts could be limited.  

The immediate cushion for the pair is seen at the previous 2021 low of 1.1524, below which the falling trendline support at 1.1512 could be challenged.

A firm break below the latter is needed to unleash the additional downside towards the July 2020 levels of around 1.1450.

EUR/USD: Additional levels to consider