EUR/USD Price Analysis: Bull and bears go head to head at critical trendline support

• EUR/USD bulls are eyeing a move higher away from the counter trendline. 
• Bears eye a run back to 0.9700 key support. 

The euro will depend on how the market levels out following the hectic Federal Reserve event that left the US dollar hanging on a thread. In this respect, the bond markets will be important. So far, the 10-year yield has carved out the M-formation on the daily chart with the yield moving in on the neckline and hugging the counter trendline.

US dollar & 10-year yield technical analysis

However, the retracement has potentially run its course in a 50% mean reversion. The bulls will need to get above 4.20% for a convincing upside continuation bias. 

As for the greenback, as measured by the DXY index, it has jumped back to test 112.00.

Looking forward, if the bulls can get above 112.00 and then 112.50, there will be prospects of a move to 114.00. Given that the euro makes up the majority of the basket of currencies that the dollar is measured against, this can signify the possible trajectory for the euro as well:

EUR/USD weekly chart

On the weekly chart, the price is testing the neckline of the W and a counter-trendline support area. This would tie in with the prospects of lower US yields and a softer US dollar if DXY cannot get above 112.50 soon. 

EUR/USD daily chart

The daily chart is also pointing to a lower level as its tries to break the trendline. The M-pattern's last leg is relatively short compared to the front side of the formation so it could be expected to extend lower in the coming sessions on Thursday. However, 0.9700 could be a tough nut to crack.