EUR/USD saw a surge in upward momentum on Thursday, pushing towards the 1.1050 zone as the US Dollar (USD) faced selling pressure after disappointing data releases and the European Central Bank (ECB) decision to lower policy rates.
The US Dollar Index (DXY) ended its four-day winning streak as weak US labour market and Producer Prices data led to a decline in the currency. The index met resistance around 101.80 as risk sentiment improved and US and German yields rose.
The ECB’s decision to cut rates, although expected, added to the Euro’s strength. President Christine Lagarde mentioned the potential for further rate cuts in the future, which could narrow the policy gap between the ECB and the Fed and support EUR/USD.
Speculators have increased their net long positions in the Euro, while commercial traders have raised their net short positions, indicating mixed sentiment in the market.
EUR/USD Short-Term Technical Outlook
If bulls maintain control, EUR/USD could face resistance at 1.1155, 1.1201, and 1.1275. On the downside, support levels include 1.1001, 1.0948, and 1.0881. The pair’s upward trend is expected to continue above the 200-day SMA.
In the four-hour chart, positive sentiment is rising, with resistance at 1.1091 and 1.1155. Support levels are at 1.1001 and 1.0949, with the RSI above 56.
Analysis:
The weakening US Dollar and ECB rate cut have boosted EUR/USD, with potential for further gains if the Fed cuts rates. Speculators and commercial traders show mixed sentiment, indicating uncertainty in the market. Technical indicators suggest upward momentum for the pair in the short term. Investors should monitor central bank policies and economic data to gauge future movements in the currency pair.