In today’s American session, the EUR/USD pair has surged to a fresh seven-month high, reaching close to the psychological barrier of 1.1000. This uptrend is driven by the weakening US Dollar, which is facing speculation of emergency rate cuts by the Federal Reserve due to concerns about a potential US economic slowdown.
The US Dollar Index (DXY), a measure of the USD against six major currencies, has dropped to 102.20 as global markets witness a sell-off in equities and a resurgence of risk-perceived currencies. Despite this, the US Dollar found temporary support following positive US ISM Services PMI data, indicating a rise in service sector activity.
On the Eurozone front, persistent inflationary pressures have lowered expectations of further rate cuts by the European Central Bank (ECB), supporting the Euro’s strength against the USD.
Technical analysis shows that the EUR/USD pair is attempting to break out of a channel formation on the daily chart, with the 200-day EMA acting as a significant support level. The RSI indicator is also signaling a bullish momentum if it remains above 60.00.
To the upside, a break above the intraday high of 1.1009 could drive the pair towards the August 10, 2023 high at 1.1065 and the key resistance level of 1.1100. Conversely, a downside move below the August 1 low at 1.0777 could lead to a retreat towards the February low near 1.0700.
Euro FAQs
The Euro, the currency of the Eurozone, is the second most traded currency globally after the US Dollar. The European Central Bank (ECB) in Frankfurt manages monetary policy for the Eurozone, with a focus on maintaining price stability. Economic indicators such as inflation data, GDP, and trade balance can influence the value of the Euro.