EUR/USD made a strong move higher on Monday, briefly surpassing the important 1.1000 level. This surge in the Euro came as the US Dollar weakened, with markets anticipating a potential rate cut from the Federal Reserve outside of its regular meeting schedule. Concerns about a possible recession in the US also weighed on investor sentiment.
Investors are closely watching economic data and signals from the Fed, as well as global market movements, for clues about the direction of the US economy. Austan Goolsbee, President of the Chicago Fed Bank, emphasized the need for the Fed to be cautious in its decisions and not overreact to short-term market fluctuations.
The divergence in monetary policy between the Fed and the European Central Bank (ECB) could narrow if the Fed decides to implement more aggressive rate cuts. This could lead to a weaker Dollar and potential gains for EUR/USD in the near future.
EUR/USD Technical Analysis
In the short term, EUR/USD faces resistance at 1.1008 and 1.1139, with support levels at 1.0827, 1.0777, and 1.0666. A move above the 200-day SMA could signal a continued bullish trend for the pair.
On the four-hour chart, bullish momentum is evident with resistance at 1.1008 and 1.1139, and support at 1.0777 and 1.0709. The RSI indicator shows a level of around 68.
Analysis:
The weakening Dollar and potential Fed rate cuts are driving the EUR/USD pair higher, with key levels to watch for both resistance and support. Investors should monitor economic data and central bank decisions closely to assess the impact on their portfolios and consider potential opportunities for currency trading.