As the EUR/USD pair hovers just below the critical level of 1.12, investors are closely watching for potential bullish momentum. According to Scotiabank’s Chief FX Strategist Shaun Osborne, the pair is currently at its highest level since July 2023, with a brief retest of Friday’s high in overnight trading.
Key Factors Driving Market Movement
One of the key factors supporting the EUR is the narrowest EZ/US 2Y spreads since mid-2023. This provides essential support for the currency, despite Germany’s IFO Business Confidence easing to 86.6 this month. While the index reflects weakness in most sectors outside of services, it remains above recessionary levels.
Short-term trading patterns indicate a potential peak for the EUR, with a bearish “evening star” pattern forming on the 6-hour charts. However, losses are expected to be limited in the short term, with trend dynamics remaining bullish across various oscillators.
Expert Analysis and Forecast
Looking ahead, experts predict that the EUR may face resistance around the low to mid 1.11s, with key short-term support at 1.1100/10. Despite the potential for minor losses, the overall trend remains positive for the EUR in the short, medium, and long term.
Investors should closely monitor market developments and key support levels to make informed decisions about their investments in the EUR/USD pair.