EUR/USD has surged to new highs in 2024, surpassing 1.1100 as the US Dollar continues to decline. The latest inflation data from the Eurozone matched expectations, adding to the bullish sentiment in the market.
The Dollar’s weakness can be attributed to anticipation of the Federal Reserve’s easing cycle, with Chair Jerome Powell expected to deliver a dovish message at the upcoming Jackson Hole Symposium. This has led investors to believe that a rate cut in September is imminent, although the size of the cut may be smaller than initially expected.
On the other side of the Atlantic, the European Central Bank (ECB) is also considering interest rate cuts in September due to economic weakness in the euro area. The policy gap between the Fed and the ECB could narrow if the Fed implements larger rate cuts, potentially driving EUR/USD higher in the medium term.
Looking ahead, key events to watch include the release of FOMC Minutes, flash PMIs, and speeches by central bank governors. The technical outlook for EUR/USD suggests further upside potential, with resistance levels at 1.1119 and 1.1139, while support levels are at 1.0978 and 1.0949.
Overall, the current market conditions point towards a stronger Euro against the Dollar in the short term, but long-term economic outlooks may favor the US economy. Investors should closely monitor central bank policies and economic indicators to make informed decisions in the coming weeks.
EUR/USD Short-Term Technical Outlook
EUR/USD is expected to test key resistance levels in the short term, with a potential target of 1.1139. On the downside, the 200-day SMA at 1.0843 remains a crucial support level to watch. The pair’s overall uptrend is likely to continue as long as it stays above the 200-day SMA.
In the near future, focus will be on the 55-SMA support at 1.0978 and resistance at 1.1119. The relative strength index (RSI) indicates a strong bullish bias, suggesting further gains for EUR/USD in the coming days.