The Euro-to-Dollar exchange rate's rally has faded but consensus for further gains and fresh multi-year highs to materialise ultimately remain intact.

The two shooting star candlesticks patterns which formed at the two most recent peaks are bearish signs which could be interpreted as being indicative of a waning of the uptrend:

The lack of upside momentum observed in the MACD indicator is another sign the trend may be fading.

However, on their own these are not strong enough indications to lose faith in the uptrend and we therefore stick to our bullish stance.

A break above the 1.2094 highs is still expected and would be an indication of a continuation higher to a target at 1.2190, just below the R2 monthly pivot.

Pull-backs in the uptrend offer “a chance to buy” according to Richard Perry of broker’s Hantec Markets.

“Near term corrections remain a chance to buy and with the support forming above what I now see as a key band at $1.1820/$1.1910, there is still a strong formation of higher lows. The uptrend channel is still a key factor and the momentum indicators remain strongly configured to suggest that weakness is a chance to buy,” saiys Perry.

Yet he does also note that, “the bulls are only returning tentatively at the moment,” as evidenced by the recent pullback.

That the correction is merely a prelude to further gains is also the view of Robin Wilkins at Lloyds Bank:

“The latest pullback has held 1.1925 support. With intra-day studies a little "oversold" they suggest a rebound from this area can develop.

"The nature of this rebound will determine whether we head up again into the 1.21-1.23 key resistance zone, or whether we develop a lower high and breakdown through this support and then 1.1820/00 to open 1.17-1.15. Key data tomorrow and Friday are the likely driver."

Taking a cautious stance near-term is Karen Jones, technical analyst with Commerzbank who sees the pair as “exposed,” but ultimately interprets the trend as "intact" as long as the longer-term five-month trendline remains unbroken.

She distinguishes this from a short-term trendline which provided the falling exchange rate with support at 1.1921 during the recent pull-back.

We also note the potentially very bearish wedge pattern possibly outlined on the Commerzbank chart which, if it breaks down would signal a speedy rout lower.