The Rise of EUR/USD: Analyzing Market Trends and Impacts
EUR/USD Continues Upward Momentum
- EUR/USD added to Wednesday’s uptick and revisited the 1.1180 zone.
- The US Dollar kept the bearish tone well in place post-FOMC.
- The intense risk-off sentiment propped up the upside in the pair.
EUR/USD maintained its upward momentum well and sound on Thursday, retesting the area of three-week highs around 1.1180.
Factors Driving EUR/USD Performance
- The US dollar’s bearish performance post-FOMC, with market players digesting the 50-basis-point rate cut by the Federal Reserve and potential future rate reductions.
- The US Dollar Index (DXY) facing selling pressure, dropping below 101.00 amidst fluctuating US yields.
- ECB cautious stance on rate cuts in contrast to the Fed’s potential additional rate reductions, narrowing the policy gap and potentially supporting EUR/USD.
Impact on Market Sentiment
Following the FOMC event, uncertainty lingers on the size of the September interest rate cut repetition. ECB’s decision to ease monetary policy was influenced by inflation and economic conditions, with a cautious outlook on further actions.
Future Outlook
- Market anticipates two more rate cuts from the ECB and further easing from the Fed by year-end, potentially narrowing the policy gap.
- US economy expected to outperform the European counterpart in the long run, limiting prolonged weakness in the dollar.
Technical Analysis of EUR/USD
EUR/USD short-term technical outlook suggests upward trend continuation as long as it remains above the key 200-day SMA.
Key Levels to Watch
- Resistance levels at 1.1189, 1.1201, and 1.1275.
- Support levels at 1.1080, 1.1055, and 1.1001.
Overall, EUR/USD’s performance is influenced by global economic conditions, central bank policies, and market sentiment, reflecting the ongoing dynamics in the forex market.
Disclaimer: This analysis is for informational purposes only and should not be considered as investment advice.